[ Focus: Insurance] C
ontractors buy insurance policies every year to protect themselves in the event of a loss. For many contractors, it is only at the moment a claim is made that they will realise the true value of the insurance product they have purchased. While some contractors have made insurance claims in
the past, those who are fortunate enough to have avoided a loss might not fully consider an insurer’s requirements when an unfortunate incident takes place.
First rule The fi rst rule for any contractor is always to act as if they are uninsured. That might seem like a strange thing to say, but the contractor has a duty to prevent loss, rather than simply ignoring a risk in the expectation that the insurer will pick up the bill at the end. When a contractor acts is if they are uninsured, they
will naturally take all reasonable precautions to prevent loss and to minimise a loss when something starts to go wrong. All too often, the size of a loss has increased through inaction from the contractor. An insurer will only look at the initial loss – it will usually consider any further losses that may arise from a failure to address the effects of the original loss to be beyond the terms of the insurance contract. Losses that could have been avoided may fall back on the contractor. Reasonable care must be taken at all times to avoid
the potential for a loss – indeed, all insurance policies include a warranty that reasonable care must be taken at all times. If it is deemed that a contractor did not take reasonable care, for instance to safeguard their property, an insurer may refuse to pay the claim. Contractors must always check their policy wording and
comply with any conditions laid out. It is not possible to plead ignorance after the event, and if a policyholder falls foul of the requirements of the policy, then they may fi nd themselves out of pocket when a loss occurs.
Thefts All thefts must be reported to the police immediately and a note of the crime reference number obtained. This is to enable an insurer to validate the loss, and to check that the details of the loss reported to the police correlate with the details presented to the insurer. A loss or any incident that is likely to give rise to a claim
should be reported to the insurer immediately. There are instances where an insurer needs to act fast to investigate a loss, and evidence can be lost if there is a delay in reporting. Late reporting of an incident can cause a breach of policy conditions and lead to a loss being unpaid. In the event of a loss arising from theft, an insurer
will require proof of ownership of all items lost, and particularly any items of a reasonable value. Contractors should produce an inventory of items they wish to claim for and attach all purchase receipts to the list submitted to the insurer. It is unreasonable for a contractor just to submit a list of items and expect the insurer to pay out. After all, a contractor would not reimburse a customer who reported a defective product without fi rst receiving a purchase receipt and then being able to examine the product.
Damages When a loss takes place and items are damaged, do not simply throw the damaged items away. It is evidence that an insurer might need to look at when investigating the loss. In addition, there may be residual value to the items, even as scrap, that an insurer can use to recoup some of the money paid out. If thrown away, an insurer may seek to reduce the claim payout by the value of the salvage they would have otherwise received. Speak to your insurer before taking any action. Insurers often suffer from the stigma that they are
About the author
Ian Hollingworth Ian Hollingworth is claims manager at Electrical Contractors’ Insurance Company.
‘happy to take your money, but not so happy to pay out’, but this is simply untrue. At all times, the policyholder must take responsibility to safeguard their property and do all they can to prevent a loss. If all reasonable precautions are taken and evidence of a loss can be provided, insurers take pride in providing a swift payout. It is not in an insurer’s interests to resist payment of a reasonable loss, as this can create reputational damage among customers and insurance brokers, and lead to a drop in business. At the ECIC, we understand the needs of our policyholders
and in times of economic instability we are aware that cash fl ow may be a real issue for many contractors. We therefore look to work with our customers and meet their needs. By working together, any issues can be resolved swiftly and claims can be settled with the minimum of fuss. We constantly monitor customer satisfaction and year after year are being told by our customers that we perform much better than our competitors. They rate our service as excellent and we take pride in maintaining their trust.
March 2012 ECA Today 67
SHUTTERSTOCK/ALEXSKOPJE
SHUTTERSTOCK/BORTN66
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