A good 40% of small businesses are going to experience a general liability claim in one form or another over the next decade, says The Hartford in a relatively recent study.
You could always hope that the odds would continue to be in your favor and that all goes well. But it’s always in your best interest to make sure you’re prepared for any sticky situation, should it come to that.
For example, do you know what Insurers are going to look for in the event of an accident? You may have a COI on your desk, but that doesn’t mean that you’re automatically in the clear. There’s a claim review process to be done, and you must meet all its specifications before Insurers begin to honor your indemnification agreement/s. Do you know what they’re going to be looking for in a COI – assuming you have it on your desk?
The Liability Claims Adjuster: Friend or Foe?
Okay, that heading is drumming it up a bit. In reality, a claims adjuster is a little bit of both: his goal is to defend or indemnify those protected by the policy, but also to protect the assets of the Insurer. As Investopedia notes: “A claims adjuster investigates insurance claims to determine the extent of the insuring company’s liability.” In short, he’s the guy that determines how much the Insurer needs to cover.
To determine that, the claims adjuster would need to launch a comprehensive investigation of the “occurrence,” which begins when the Insured sends in a Loss Notice. It would involve interviewing claimants and witnesses as well as going through all the documents related to the claims, including your COI.
Note that claims adjusters don’t always have your best interests in mind: they’re basically employed by the Insurer, and some are keen to minimize the estimate as much as possible.
The Three Things You Need
- A COI. One of the first things claims adjusters look for is the existence of a policy. The adjuster will investigate whether the policy was still in effect during the period of loss. If you haven’t been diligent enough in keeping track of expiration dates, you’ll be in hot water this early in the review. If the adjuster finds that the policy has already expired, you can say goodbye to your indemnification agreement.
- The Actual Scope of Your Coverage. After the initial review process, the adjuster would review the policy itself and determine the exact extent of the coverage by looking for the Named Insured and Additional Insured/s, as well as coverage for particular statuses like ongoing/completed operations, etc. If you haven’t read the actual endorsement and just entered what you saw on your COI, chances are you are none the wiser about whether or not you’ve been covered the way you’re meant to be covered.
- A Waiver of Subrogation IN YOUR FAVOR. At this point, the Insurer has more or less validated whether the parties involved are indeed covered, and will agree to pay the claim once all things are in order. But you’re not out of the woods yet. If you never bothered to confirm whether the waiver of subrogation you have is actually in your favor, you (and/or your company’s Insurer) are now at risk of being subrogated in an attempt to recoup some of the funds paid out for the claim.
Careful Review of Endorsements Cannot Be Neglected
COI admins rarely ever have the luxury of time. But that fact doesn’t excuse them from carefully poring through every bit of detail found in COIs and endorsements. The fact is all of the negative scenarios above can be avoided if they have been paying close attention to their renewals, their endorsements, and their documents.
If you are to successfully manage your firm’s risks, you need to do your due diligence and be as religious in your follow-ups as they are thorough in their compliance review.
COI Tracker Makes Compliance Tracking Manageable
But that’s often easier said than done, especially if you’re doing compliance manually. Thankfully, compliance software like COI Tracker can make the entire process easier by eliminating the need for the most taxing details of compliance tracking.
If you’re interested in making your compliance process a lot easier – and a lot more accurate to boot – contact us today for a free trial. We’d love to get you started on your new and improved risk management process.