Commercial Insurance Claims
This section will cover:
1. Property Claims – Fire & Special Perils, All Risks, Theft, Glass and Money.
2. Pecuniary Claims – Legal Expenses and Business Interruption.
3. Liability Claims – Employers Liability, Public, Products and Professional Indemnity
4. Commercial Vehicles
1. Property Insurance:
Fire and Special Perils Claims:-
a. Notify the insurer
b. Mitigate losses – do all things to reduce the extent of the loss.
c. Give full details of the damaged property in writing to the insurer
d. Proof of loss – e.g., Builder’s estimate and or a statutory declaration of the truth of the claim.
e. The insurer should also check to see if the policy is in force
f. The insurer must also check to see if the claim is valid
g. In the loss covered under the policy?
h. For large losses, an adjuster is usually appointed to investigate the loss from start to finish
i. The adjuster will also deal with disposal of salvage as well as any recovery options.
j. The insured can also appoint a loss assessor to act on their behalf.
k. Settlement can be by cash or repair or reinstatement.
2. All Risks:
The settlement procedure will be the same as in Fire & Special perils above.
3. Theft Claims:
a. Notify the authorities (condition precedent to liability)
b. Offer the Insurer the police crime reference number when claim is submitted.
c. For large losses, an adjuster is usually appointed to investigate the loss from start to finish
d. If fraud is suspected, a specialist investigator is appointed.
j. The insurer will liaise with the police and if the salvage is recovered, insurer can claim such.
4. Glass Claims:
a. Insurers use approved repairers
b. No incentive as a result of the above for fraud claims.
c. The invoice is sent directly to the insurer from the glazers
d. An excess is usually applied.
5. Money Claims:
a. After the usual investigations, insurer will require proof that the money was on the premises.
b. Details of what actually happened or how the loss took place
c. The condition precedent to liability was observed (ie: loss reported to the authorities)
d. There is a potential here for fraud, insurers will turn to a specialist investigator in case of suspicion.
Pecuniary Insurances:
1. Legal Expenses Claims:
a. Claims under this heading is different from all other claims as insurers first assess the likelihood of a successful claim before accepting
to defend or bring an action in court in the insured’s name.
b. There is a condition under the policy requiring the insured to notify the insurer before any claim starts, insurer will take any steps as it
sees fit which could include appointing its own solicitor .
c. The insurer can in the insured’s name agree with the other party to settle the matter “out of court”.
2. Business Interruption (BI) Claims:
a. There is no BI claims if there is no property damage claims (material damage proviso)
b. The claim is investigated alongside with the property claim.
c. These claims are unique as the insurer would have to set the indemnity period at proposal stage in addition to
questions regarding alternative premises etc.
d. The insurer takes measures to minimize the loss due to the indemnity period where the insurer is exposed for months
3. Creditor Claims:
a. This cover provides compensation if the insured is unable to pay a loan due to death, disability or being retrenched
b. There is usually a waiting period of say 30 days.
c. Proof of the outstanding loan as we all proof that the insured is not working will be required prior to any payment.
Liability Insurances:
These claims out of the legal liability to pay compensation for incidents resulting in injury to Third Parties
(including employees) or for damage to their property.
1. Employers Liability (EL) Claims:
a. The claims are govern by the EL Act 1969, which is one of the compulsory insurances in the UK.
b. The indemnity provide is for bodily injury or disease suffered by the insured out of and in the course of their employment.
c. It is usually combined with public liability, underwriters pay carefully attention to high propensity to injury/ disease industries like mining.
2. Public Liability (PL) & Products Liability (PRO) Claims:
a. Covers the insured’s legal liability to pay damage to third party property or third-party injury due to the insured’s
negligence or breach of their statutory duty.
b. PL is often combined with Products Liability Insurance, but PRO claims are in respect of losses arising out of the sale or
supply of the insured’s product.
3. Professional Indemnity (PI) Insurance Claims:
a. This policy provides compensation to third parties who have suffered financially by relying on the advice of the insured.
b. The policy can be written on a claims made or loss occurring Basis. There is usually a Retroactive date of inception (RDI),
where provided the insured has maintained cover over the years, the existing insurer will pay claims against the insured for losses now
showing up but the seed giving rise to the loss occurred many years ago. This is an example of a policy being written on a Claims Made
basis. The cover is a lot more restricted under a Losses Occurring basis where only claims occurring and reported during the current
insurance period will be paid.
c. Products Liability policies are usually written on a Claims Made basis but can also be on a Losses Occurring basis. Public and Employers Liability
policies are usually written on a Losses Occurring basis.
Liability Insurances:
3. Professional Indemnity (PI) Insurance Claims cont’d:
a. This policy provides compensation to third parties who have suffered financially by relying on the advice of the insured.
b. The policy can be written on a claims made or loss occurring Basis. There is usually a Retroactive date of inception (RDI),
where provided the insured has maintained cover over the years, the existing insurer will pay claims against the insured for
losses now showing up but the seed giving rise to the loss occurred many years ago. This is an example of a policy being written
on a Claims Made basis. The cover is a lot more restricted under a Losses Occurring basis where only claims occurring and
reported during the current insurance period will be paid.
c. Products Liability policies are usually written on a Claims Made basis but can also be on a Losses Occurring basis. Public and
Employers Liability policies are usually written on a Losses Occurring basis.
d. For Policies written on a Claims Made Basis, the questions are:–
i. When was the claim made?
ii. Was it in accordance with the policy terms notified to the insurer?
iii. Did insurance cover exist at that time?
e. For Policies written on a Losses Occurring Basis, the questions are?
i. When did the loss occur
ii. Did insurance cover exist at that time
Liability Insurances:
3. Professional Indemnity (PI) Insurance Claims cont’d:
f. Once the insurer is satisfied that the loss is covered under the policy a full investigation will be carried out as followed:
i. What work was being carried out and is it listed in the business description on the policy schedule?
ii. Obtaining all relevant document
iii. Interviewing any witnesses
Notes:
1. From 31st July 2013, the MOJ/ Claims Portal was extended to incorporate claims from Employers & Public Liability – £25,000
2. For claims up to £10,000, the maximum amount recoverable for legal costs by successful claimants is £900 plus VAT.
3. Once a claim does not leave the process nor proceed to litigation, for claims between £10,000 to 25,000 – £1,600 plus VAT
4. The above does not apply to EL type claims with multiple claimants alleging disease type injuries such as noise induced
hearing loss (although the Civil Justice Council has recommended fixed costs for noise induced hearing claims).
5. The insurers deal directly with the third-party claimants. All communications to the insured MUST be handed over promptly.
6. For Third Party Property Damage, insurer investigates, decision made on Liability, evidence & sometimes, inspection needed
7. The Third Party’s solicitors will usually send Personal Injury correspondences including injury report (Special or General
damages paid). Eg: Special Damages – quantified by medical expenses, future loss of earnings . General – Pain and Suffering,
Loss of Amenity (PSLA) and loss of use of a vehicle.
8. Cases which proceeds to court:- the Judge can rule for, periodic reassessments allowed , single lump sum payment , structured
settlement or allow for periodic payments at certain future dates.
Commercial Vehicle Claims:
These are the same as under the the private cars section however under commercial vehicles, the insured
usually arranges the repair and then sends the invoice , net of excess to the insurer after the repairs. This
is because many commercial vehicles require specialist repairers which may not be available to insurers.