Step by Step: What to Do When a Loss Occurs
Those 12 steps will help you to understand the claims settlement process, to participate in the decision-making process and to take charge of the claims settlement process so you can get back to your "real life" as quickly as possible.
The Claimant's Handbook
This guide will help you to keep track of all the steps, documents and information you need to settle your claim.
Step by step: what to do when a loss occurs
THE FIRST HOURS
1- Notify your insurer
Contact your broker or insurer and describe to him to the best of your ability the circumstances surrounding the loss.
2- Limit the damage
It is your responsibility to take steps to limit the damage or stop the situation from deteriorating, but do not make any permanent repairs before speaking to your insurer. If you are able to do so, document the loss (with pictures or videos). If water damage has occurred, dry everything as quickly as possible to avoid mold developing. If you throw out water soaked items, make sure to take a picture and describe them for the purposes of settling the claim. In case of fire, do not enter the building before receiving permission from the competent authorities.
3- Authorize emergency work
In order to avoid further damage occurring, emergency work may be necessary. You can retain the services of a disaster restoration professional or your insurer can suggest one and even dispatch the company to the site, but make sure you properly understand what they are doing and how much it will cost before giving them authorization to proceed.
4- Meet with the claims adjuster in charge of your file
The insurer will designate a claims adjuster to settle your claim. He will guide you through the claims process. He will investigate the cause of the loss, estimate the damages and negotiate the settlement with you.
Handy tips and advice
- Check with your insurer to make sure the emergency measures taken are covered by your contract.
- Analyse the situation before authorizing the demolition or replacement of certain materials, and keep a sample of what is to be replaced.
- Refuse to have any of your property moved before taking an inventory and documenting the state of the items (salvageable or a total loss).
- Review your options before signing an assignment of claim. Read our advice on the text box below ” Should I sign the assignment of claim or not? “.
- Monitor the work done by the disaster restoration professionals: for example, after a fire, the service provider might take away all your clothing for cleaning even though it may be more advantageous and less expensive to replace certain outdated pieces of clothing or clean them yourself. If your contract includes certain coverage limits (for instance, a $15,000 maximum for water backup in the basement), you might have to make certain decisions on how you use the insurance compensation to which you are entitled. Get a quote before the disaster restoration professionals do their work, and tell the claims adjuster what your plans are in order to avoid having a large chunk of your compensation used up on cleaning old clothes or restoring furniture of little value.
- Write on your checklist the name of the team leader and the number of workers on-site, how many hours they worked and what kind of emergency work was carried out.
- Monitor the work. After all, it’s your home.
5- Verify how much coverage you have with the help of the claims adjuster
The claims adjuster will explain to you the coverage your insurance contract provides and, if necessary, how to go about obtaining additional living expenses (for example, if you have to leave your home). Keep all your receipts for expenses incurred in the wake of the loss since they may be reimbursable.
Furthermore, if you need to have your furniture stored, carefully choose the personal effects that you want to keep with you, as it may be difficult to access the storage space or find a specific item amongst all the boxes.
Review THE QUOTES and approve the proposed costs BEFORE AUTHORIZING the work of accepting the settlement offer.
THE CLAIMS SETTLEMENT PROCESS
1- Identifying the cause of the loss
This is the responsibility of the claims adjuster. He will confirm the damage, verify your initial statement and, if necessary, consult with specialists. At his request, you will have to provide him with certain information or documents to help him identify the cause of the loss. Depending on the results, he will confirm whether your claim is admissible or not under the terms of your insurance contract.
2- Estimating the damages
The claims adjuster must also estimate the amount of damages and decide on how much compensation the insurer will offer to pay you. He will sometimes be assisted by an appraiser or other specialists. However, it is your responsibility to properly document and justify your claim, and, in particular, to prepare an inventory of damaged, destroyed or stolen property with as much proof of ownership as possible (invoices, pictures, etc.). For each item, indicate whether you wish to salvage it by having it cleaned or whether you feel it is unsalvageable. Ultimately though, it is the claims adjuster who is responsible for declaring an item a total loss.
The faster you submit your inventory, the faster your claim will be processed. Be aware that the insurer could refuse to pay if you make a claim for more than you actually own or overestimate the value of your property.
3- Choosing the contractor
You are free to choose the contractor who will do the repairs or you can do them yourself. Insurers can also suggest service providers with whom they already have a business relationship. No matter what, the decision is always up to you. Discuss your decision with the claims adjuster in charge of your file and come to an agreement on the terms and conditions of the settlement, since they may differ if you do the work yourself.
4- Authorizing the work
Review the quotes for the work, taking care to verify the proposed costs for each step of the process—for instance, rebuilding and storage; or cleaning, repairing and replacing personal property—as well as timelines. Confirm it all with the claims adjuster and verify whether your insurance contract provides lump sum compensation or breaks down the compensation into fixed “line items.” If there is a limit on the amount of insurance, you may have to prioritize between repairs to your home and replacing damaged personal property.
Should I sign the assignment of claim or not?
The disaster restoration professional, the contractor or the service provider may ask you to sign an assignment of claim that will allow the insurer to pay him directly for the work he does at your home. You have no obligation to sign this document. Be aware that although this procedure simplifies payment to service providers, it may make it hard to control work-related costs.
In order to maintain some control over your total compensation, you can ask that the maximum cost of the work be specified in the assignment of claim; require a signed letter of satisfaction before the final cheque is sent; or ask the insurer to make out the contractor’s final cheque in both your names. These actions enable you to avoid “signing a blank cheque” when you make an assignment of claim, and also allow you to confirm that the work was done to your full satisfaction before making the final payment.
5- Negotiating the settlement
Once the claims adjuster has received the inventory of damaged personal property (with the items’ origin and replacement value as of today’s date), he can calculate the settlement offer using the information in your contract concerning coverage, limits and exclusions, and, in particular, replacement cost or depreciated value.
If you have replacement cost insurance, your property will be repaired or replaced by new items of the same nature and quality, even if replacing them costs more than what was originally paid. If you decide, however, not to have certain items repaired or replaced, the insurer will compensate you for the value of the damaged goods on the day the loss occurred, in other words, at their depreciated value.
Before any of your property is repaired, cleaned or replaced, make sure to carefully review the settlement offer and confirm that it is acceptable. If not, there is always room to negotiate.
6- Paying compensation and the deductible
Depending on the extent of the damages, payments are made throughout the settlement process, as the service providers submit their invoices. Make sure you have told your insurer whether or not you are satisfied with the work that was done before the insurer pays the service provider. If damages do not exceed the limit of insurance, your deductible will be deducted from the compensation or the insurer will ask you to pay this amount directly to the service provider.
7- Claiming the amount of the deductible from a liable third party
If a third party is liable for the damages you suffered, you can claim reimbursement from this party for both your deductible and damages that your insurer did not reimburse. Do not forget that there are limitation periods for taking legal action. Be careful! Ask your claims adjuster for more information and consult a lawyer, if necessary. A model letter is available at chad.ca.
Did you know?
The insurer not only has the obligation to return your property to the same condition it was in before the loss, but it is also obliged to compensate you within 60 days of having received your notice of claim, or the relevant information and additional supporting documents that it requested you provide.