When disaster strikes: 10 steps to making a commercial insurance claim

A physical disaster such as a fire or flood at your business premises can be financially crippling. In the wake of such an incident, would you know what to do? The experts at Morgan Clark look at some of the important actions you should take, and some common milestones you’ll likely encounter along the way.

1) Plan ahead

One of the best ways to ensure a quick and efficient insurance claim is to plan ahead. Specifically:

• Keep a copy of your insurance details in a secure, off-site location
• Keep a back up of all electronic records off-site
• Annually review the sums insured and indemnity periods
• Ensure warranties and endorsements attached to the insurance cover are read and continuously adhered to throughout the term of the insurance policy
• Keep important phone numbers, including your insurance company’s out of hours number, stored in your mobile phone

When disaster strikes, not having immediate access to your policy details will cause unnecessary stress, uncertainty, and will ultimately delay the notification of the claim.

2) Safety first

In the immediate aftermath of the incident, it is your responsibility to mitigate damage, prevent theft, and ensure the premises are safe to enter. If the incident has caused any immediate threats, then you’ll need to appoint local professionals to carry out emergency building works to the premises. This may include work such as securing dangerous parts of the building, weather proofing, and boarding up of exposed areas.

If the issues are less pressing, they will become part of either the buildings or contents and stock claims. In such instances, the insurer may offer you their preferred contractors to undertake the salvage and rebuild works, but you are not obliged to use them.

Before the clean up operation, take photographs of any damage caused and refrain from disposing of material items that are likely to be claimed for, at least until instructed to do so, as insurers will want to inspect them in most cases.

3) Communication is key

Speak to your staff, suppliers, clients or customers and any other interested parties, and inform them of the situation, explaining you will keep them updated with progress. A little communication can go a long way at times like this.

You should also notify your insurance company as soon as possible. Most insurers have an emergency number, which you can use to contact them should the incident happen out of hours. It’s wise to have this number stored in your mobile phone at all times, just in case.

If your premises is rented, you should inform your landlord as soon as possible, so they can notify their own insurance company.

4) Consider appointing a loss assessor

You may wish to appoint a loss assessor (sometimes known as a public loss adjuster), who will work on your behalf to manage the entire claims process. This will speed the process up, and allow you to focus on more pressing business matters. To ensure you use a reputable company, check that they are regulated by the FCA (Financial Conduct Authority).

5) The loss adjuster

A loss adjuster will be appointed by your insurance company, and will likely want to meet with you at your business premises as a matter of priority, after you make the call. Following an initial fact finding meeting, the loss adjuster will prepare a detailed report for the insurer’s underwriters.

Following this, the loss adjuster will often appoint a forensic expert to investigate the cause of the incident. This can be a lengthy process – often taking months to finalise – and no liability can be claimed while the investigation takes place.

The loss adjuster’s role does not end here, and you’ll be seeing a lot of them throughout the duration of your claim.

6) Mitigating your losses

You will be expected to do everything in your power to continue trading while investigations take place, and the onus is on you to keep your business running, including finding any necessary funding required to operate. You will also be expected to find a temporary premises, if necessary.

7) Claiming for interim funds

Once your claim has been accepted in principle, but has not yet been fully quantified, occasionally insurers will offer an interim payment to cover loss of profit, provide additional funds required to continue trading (e.g. replacing damaged computers or machinery), and cover expenses such as rent on temporary premises and staff wages. While this is by no means a long-term solution, it offers a lifeline until your claim is finalised. Insurers are not legally required to do this.

8) Appointment of a chartered surveyor

The surveyor will visit the premises and put together a detailed scope of work, in preparation for your claim. If you lease the premises, your landlord will handle this, but you should know what’s going on at this stage so you can coordinate building works together.

As mentioned in point 2, you are not obliged to use the surveyor offered to you by your insurance company, and instead, you can ask the insurer to agree to fund the fees of an independent, experienced surveyor that you have selected yourself.

9) The claim

Where applicable, the claim should include details of the following:

• Business interruption
• Building works plus surveyors’ fees
• Machinery, plant and trade contents
• Fixtures and fittings
• Stock

A meeting with the loss adjuster will be held to discuss details of the points above, and a business interruption expert will likely be appointed to review the actions you are taking to mitigate your losses.

Depending on the circumstances, the simpler parts of the claim – stock, fixtures and fittings and machinery, plant and trade contents – should be agreed and replaced relatively quickly, however business interruption and building works are more complex matters, and will take a little longer.

At this point the surveyor will put any building works out to tender, you will appoint your preferred contractor, and works will commence.

By now most of your claims should have gone through, and claims for damaged stock and alike should have been paid out.

10) Back to business

With building works to complete it is time to move back into your premises and get back to business as usual. It is important to note however, that while most parts of your claim will now be finalised, business interruption will remain ongoing until the end of the indemnity period, or until your business is back trading at the level it was prior to the incident.

Finally, remember that no two insurance claims are the same. This article is intended to offer a little insight into the more common scenarios you may encounter during the claim process, but should you find yourself in a situation where a claim is necessary, it is recommended you seek professional advice.