THE IMPORTANCE OF TIMELY CLAIMS REPORTING

Timely reporting of claims is a crucial element of the claims process and should be well supported by the policies and procedures of your institution. Failure to report a claim in accordance with the policy’s requirements can result in a claim being denied, or worse, having the entire policy voided. Furthermore, promptly reporting claims enables you to take full advantage of the resources and expertise provided by your carriers.

To illustrate, it’s easy to see why reporting a burst pipe immediately is critical. Until the pipe is repaired, water will continue to cause further damage to the property. The more damage water causes, the more it costs to repair the damage. In 2014, the University of California Los Angeles suffered a water main break, releasing 75,000 gallons of water per minute–ultimately more than 20 million gallons–causing severe water damage by flooding subterranean parking structures and the Pauley Pavilion sports arena, as well as damaging other structures and causing business interruption losses.

Fortunately, campus risk management immediately informed their excess carriers of the circumstances, who were then able to provide consultative expertise as well as send local and excess carrier adjusters onsite with resources to assist in the remediation process. The prompt reporting by campus risk management was essential in preventing further damage caused by delays.

With general liability, the need to even report a claim or incident is not always as obvious as a burst pipe in a building. However, it is still critical that you report instances of even possible claims to your carrier “as soon as possible” or “as soon as practicable.” After all, an insurance policy is a binding contract between two parties that often includes strict reporting requirements for claims. While there are many reasons organizations would delay or exercise a reluctance to report claims–such as fear of an increase in premiums or not realizing a claim is reportable until sometime later–to delay beyond what a “reasonable person” would do in submitting notice could compromise the insurance agency’s ability to settle the matter expeditiously and thus forestall your case.

Avoiding prompt reporting can result in your insurer deciding the following:

1. the claim being denied for missing a reporting deadline as outlined in the insurance policy,
2. the claim being denied for not fulfilling the reporting requirements which typically involves a list of information that must be included with the claim submission to establish a sufficient notice of the claim or loss, or
3. the undue lag-time between the first notice of loss sent from your institution to the insurer causing a costlier discovery process from resources of investigators, claim adjusters and/or attorney fees.

The sooner a claim is reported, the sooner it can begin to be managed and the less it will ultimately cost.
Contact an insurance professional at USA Mutual Insurance if you have any questions or concerns regarding claims reporting.