Your Duties in the Event of a Loss

By Angelo Ganguzza, Vice President & General Manager – Brokerage Operations

We have all seen the devastating impact of Hurricane Ian on the Florida coast. Nightly news segments show us the catastrophic outcome of wildfires out West. Natural disasters always seem to grab the headlines, but we also are faced with the perils and events of running our businesses daily.

Risk management principals outline ways to protect your business, your employees and property. These include such things as risk identification, analysis, control, and financing. Buying insurance is just one component. You and your insurance carrier have entered into a contract. The carrier agrees to pay for losses that occur and are covered in your policy. For that you receive the benefit of paying a known premium for coverage that can replace, rebuild, and even provide protection for lost income.

No one want to experience a loss of any type. However, when one does occur, one of the first questions that comes up is, what do I do?

Every insurance policy is different, however one aspect of it states what your duties are as a policyholder in the event of a loss. Many people think that their insurance policy only details what they are covered for in the event of a loss. It does include the types of losses your insurance carrier will cover and what types of losses are excluded. But insurance is a contract between two parties, you and the insurance company. That means that while your insurer has responsibilities to you because of the premium you pay, you also have responsibilities as the insured to protect the property they are covering from unnecessary losses and to cooperate with them during the claims process. Failing to do either one of those can reduce or negate coverage that may have otherwise been available.

Sample policy language may look like this:

Property Insurance:

Duties in the Event of a Loss or Damage

You must see that the following are done in the event of loss or damage to Covered Property:

1. Notify the police if a law may have been broken.
2. Give us prompt notice of the loss or damage. Include a description of the property involved.
3. As soon as possible, give us a description of how, when and where the loss or damage occurred.
4. Take all reasonable steps to protect the Covered Property from further damage and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.
5. At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values, and amount of loss claimed.
6. As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records. Also, permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records.
7. Send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.
8. Cooperate with us in the investigation or settlement of the claim.

We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured’s books and records. In the event of an examination, an insured’s answers must be signed.

Commercial General Liability Insurance:

1 NOTICE REQUIREMENTS

Notice a. In the event of a CLAIM(S), prompt written notice shall be given by or for the INSURED to the Company and shall contain particulars sufficient to identify the INSURED; reasonably obtainable information with respect to the time, place and circumstances thereof; and the names and addresses of available witnesses.

b. If a CLAIM(S) is made against the INSURED, the INSURED shall promptly forward to the Company every demand, notice, summons, order, or other process received by the INSURED or the INSURED’s representative. This requirement continues throughout the life of the CLAIM(S).

c. If the INSURED becomes aware of a CIRCUMSTANCE(S) to which this Policy may apply and provides written notice to the Company during the POLICY PERIOD containing details of:

i. The alleged WRONGFUL ACT(S), POLLUTION CONDITIONS or NETWORK SECURITY COMPROMISE(S);

ii. The specific nature and extent of the injury or damage that has been sustained.

iii. How the INSURED first became aware of such CIRCUMSTANCE(S), then any CLAIM(S) that may subsequently be made against the INSURED arising out of such reported CIRCUMSTANCE(S) shall be deemed to have been made on the date first written notice of the CIRCUMSTANCE(S) was received by the Company. This right conferred upon the INSURED in this Paragraph shall terminate at the end of the POLICY PERIOD and shall not exist during the Automatic Extended Reporting Period or Optional Extended Reporting Period.

Commercial Auto Insurance:

Duties In the Event of Accident, Claim, Suit or Loss

We have no duty to provide coverage under this policy unless there has been full compliance with the following duties:

a. In the event of “accident”, claim, “suit” or “loss”, you must give us or our authorized representative prompt notice of the “accident” or “loss”. Include: (1) How, when and where the “accident” or “loss” occurred; (2) The “insured’s” name and address; and (3) To the extent possible, the names and addresses of any injured persons and witnesses.

b. Additionally, you and any other involved “insured” must: (1) Assume no obligation, make no payment or incur no expense without our consent, except at the “insured’s” own cost. (2) Immediately send us copies of any request, demand, order, notice, summons or legal paper received concerning the claim or “suit”. (3) Cooperate with us in the investigation or settlement of the claim or defense against the “suit”. (4) Authorize us to obtain medical records or other pertinent information. (5) Submit to examination, at our expense, by physicians of our choice, as often as we reasonably require.

c. If there is “loss” to a covered “auto” or its equipment, you must also do the following: (1) Promptly notify the police if the covered “auto” or any of its equipment is stolen. (2) Take all reasonable steps to protect the covered “auto” from further damage. Also keep a record of your expenses for consideration in the settlement of the claim. (3) Permit us to inspect the covered “auto” and records proving the “loss” before its repair or disposition. (4) Agree to examinations under oath at our request and give us a signed statement of your answers.

It is important to note that on all of these policies it is critical that timely notice be provided. If it is not, as mentioned above, the lack of timely notice adversely affects the insurance companies’ ability to settle or resolve the matter and they can decline or limit coverage. Our goal is to provide coverage for all covered causes of loss subject to the policy terms and conditions, and to provide you with the assurance that we will withhold our end of the contract to help rebuild, replace, and restore your business at the time of the loss as quickly as possible.

If you have any questions about your specific policy language and duties at the time of a loss, you can reach out to your broker or your local PLM Business Development Representative.