Avoiding a Tragedy

Kate McGinn XL Insurance Exton, Pa. www.xlinsurance.com

IN HIS CLASSIC “DON QUIXOTE,” Cervantes wrote, “delay always breeds danger.” For an insurance claims department, wiser words couldn't have been written. Any loss of time can influence an insurance company's capacity to minimize the cost of a claim, control a company's liability associated with it and, most importantly, compensate the company for a loss. For instance, investigating an automobile accident may be impossible if too much time has passed, or compiling a legal defense in workers' compensation claims may be hindered by a lapse of time.

To ensure good, quality claims service from an insurance company, businesses must act as quickly as possible so that the insurance company can act swiftly on their behalf.

Insurance policies are more than just pieces of paper; they are business contracts entered into with a policy purchase. Few contracts require a higher degree of “good faith.”

Waste companies enter into the agreement for several reasons. Insurance provides a valuable safety net to compensate a company if and when an unexpected financial loss occurs. When something happens, the expectation on the part of the policyholder is that the claim will be paid as quickly as possible to address the company's immediate needs.

Managing a claim is a two-way street, however. A policyholder's reaction during a claim is as important as the insurance company's response. The insurance company has little chance of knowing when or how a loss occurs. The strength of the contract, therefore, lies in the good faith of the policyholder's obligation to give timely and accurate notice when a claim occurs. Timely claim reporting starts the process rolling.

When a claim is filed, an insurance company allows an adjuster to investigate the incident to preserve facts and physical evidence. If a loss is not reported quickly, the expanse of time can threaten the availability and reliability of such evidence.

Likewise, identifying witnesses and securing statements early helps the insurance company avoid the potential for outside sources to influence witnesses. Even if a policy holder believes he has walked away from an accident without any suspicion of liability, within a matter of days or hours, a business can find itself served with legal papers alleging damages for injuries sustained by someone in the accident.

The only way for an insurance company to attempt damage control is through the prompt cooperation of the policyholder. Incidents that initially appear routine in nature can escalate into significant claims. So if a company thinks it can drag its feet or spend time “tilting at windmills” like Cervantes' tragic hero, it may be heading for a tragedy of its own making: an insurance claim that winds up being a costly mess.