Viewpoint: Know the ‘dos and don’ts’ of managing large property claims

By Alice Edwards

The recent spate of natural disasters across the U.S. — along with predictions for more severe storms — makes it critical for public officials to prepare for such events and know how to facilitate recovery.  How a large property claim is handled can affect a public entity’s ability to receive millions of dollars in potential recoveries from private insurers and the Federal Emergency Management Agency (FEMA).

Many cities and counties don’t have dedicated risk managers; therefore, responsibility for the actions that need to be taken before, during and following a major property loss can fall on a number of individuals within a government entity. Further, preparing for and filing a claim often requires a team effort involving many different government executives and managers. The following “dos and don’ts” will help cities and counties prepare for and manage a large property claim arising from a disaster.   

Before a disaster

• Start the claims process before a disaster occurs.  Have your insurance broker arrange a meeting with your claims team, including the broker, your insurer’s claim representative, an independent adjuster and perhaps a restoration company and forensic accountant.
• Create a “roles and responsibilities” chart that designates a team leader and a substitute. Also determine who will provide and gather information, purchase and contract for services, and which officials will sign off on the settlement of a large loss.
• Don’t make the mistake of thinking that a loss won’t happen.

Immediately following a disaster

• Be proactive with the initial clean-up.
• Take photographs and videos of damage.
• Identify and save damaged documents and data.
• Proceed with repairs. After notifying the insurance company in writing, remove wet building components, board up and protect broken windows and torn roof coverings, and separate damaged contents.
• Don’t delay reporting the claim. There is no disadvantage to reporting a property claim; if necessary, you can withdraw it.  On the other hand, late reporting puts you at a significant disadvantage when trying to collect funds in a timely manner.
• Don’t assume you have no insurance coverage just because you don’t have any physical damage. Losses can result from actions taken by civil authorities, lack of access, and service or utility interruption.
• Don’t forget that your entity may qualify for FEMA funds. Be sure to apply within 30 days of the “Declaration of a Disaster.”  The FEMA process needs to be integrated into the insurance claim process. FEMA requires extensive documentation, but may pay document preparation fees. It also pays some costs not covered by insurance, including amounts in excess of the policy limit or sub-limit, those less than the policy deductible, and costs of hazard mitigation and improvement projects.

When settling a claim

• Know all parties involved in your claim, including the adjuster and the insurer’s team of building consultants, accountants and specialist advisors, such as structural engineers.
• Consider hiring your own experts; your insurance policy may pay their fees.
• Require all parties to attend weekly or monthly meetings or calls to monitor progress.
• Make sure your internal team provides information promptly.
• Ask the adjusters for target dates and hold them accountable.
• Ask the team to identify significant coverage issues, such as mold, pollution and code upgrades, including fire protection systems.
• Don’t let disputes derail the settlement process. Sort them by value, setting aside those that are less significant. Seek legal counsel for help with any major coverage issues.
• Don’t ignore a “Reservation of Rights” letter, policy time limits, requirements to file a “Proof of Loss,” deadlines to file suit, or any appraisal or arbitration timelines.

When managing a large loss, there’s no substitute for adequate preparation. Review the process annually as part of your risk management routine. Update your plans more frequently to accommodate public works projects, development and other initiatives that may affect your entity’s risk profile.

Alice Edwards is partner-in-charge of Dempsey Partners’ Atlanta office. She has 30 years of experience with complex claims and global claims programs and has handled large claims throughout Europe, Asia, and the U.S. She may be reached at[email protected].