Q. You offer an insured $10,000 to repair her bathroom after a broken pipe results in water damage. The insured argues that the labour and materials will actually cost $15,000. She refuses the compensation offer, bringing the claims settlement process to a standstill. What should you do?

A. First, remember that section 15 of your Code of ethics requires that you conduct yourself with objectivity. This means that you must be open-minded and respectful when listening to the insured’s arguments. Furthermore, it is your obligation to act fairly while respecting both parties’ rights (section 27), even though you have been mandated by one of the parties—in this case, the insurer. It would be unfair, for example, to refuse the amount the insured proposed without properly analyzing why the estimates differed.

It is important to clearly explain how you arrived at the $10,000 settlement offer. For example, what did you base this settlement on? What is the hourly rate you used to calculate labour costs? What type of materials did you include? Does the insurance contract include limits that impact the settlement offer? Has the insured asked to have the sanitary facilities moved, which would result in additional work? What leads you to conclude that the compensation cannot be increased to the $15,000 the insured requested?

Supporting the insured 

If, despite your explanations, the insured still disagrees with the compensation offered, you must nevertheless support her throughout the claims process. Explain to her that she must give you evidence to support her opinion. This might include a sample of the material required for the repairs or a document comparing the current prices of certain items or equipment, which could explain the difference in the estimates. For further information, suggest she read: What should I do if I disagree with my insurer’s decision?

Remember, the insured has a right to express her point of view and you must deal with her claim fairly. It may, in fact, turn out that she is right. 

Read about other real-life cases of differing estimates in What to do when the estimates differ?