Introduction » General Information » Property Losses » Employee Dishonesty Losses » Transportation Losses » Business Interruption Losses » Liability Losses » Automobile Losses
Introduction
We prepared this memorandum to help you settle your insurance claims promptly and equitably. This information is summary in nature and is intended only as a guide. Please refer to the actual policy conditions, which will apply in your loss situation.
Your insurance policy is designed to take effect immediately following a serious loss. These guidelines should expedite the claims process.
After establishing that your policy covers the loss, the insurance company will appoint an adjuster (either its own staff member or an independent adjuster hired on a fee basis) as their representative. His/her primary job is to measure the loss and reach an agreement with you. In practice, this individual can be of great assistance in planning future action. In liability losses, the adjuster is responsible for determining the existence and extent of your liability to the claimant/third-party.
General Information
Your policy requires you to notify the insurers promptly in writing of any claim situation. This notice should be given through HKMB HUB International's claims department. In the event of a significant loss, report the claim immediately by telephone and later provide a written report for recording purposes.
If you are uncertain about which course of action to take and insurer consultation is not available , we recommend that you proceed as if you had no insurance; the "reasonable person" test will apply when these actions are subsequently evaluated.
Record pertinent information and keep updated records. The adjuster and/or the HKMB HUB claims department will supply you with appropriate forms for proof of loss and information gathering.
All losses, particularly serious losses, involve considerable amounts of time to establish facts, measure accuracy and file claims.
Try to establish and maintain good relations with the adjuster. Be prepared to answer questions relating to the origin of the loss.
Particularly when a loss occurs at a branch or in a foreign country, set up a good system of communications and control.
Establish and use the adjuster and/or insurer's claim number.
In some situations where coverage may be questionable, instead of disclaiming coverage, the insurer may decide to go ahead with the handling of the claim under a Non-Waiver Agreement which allows the insurer to continue handling the claim without waiving any rights it may have to disclaim liability. Consult the HKMB HUB claims department prior to signing.
HKMB HUB is available to work with you on all aspects of loss adjustments. Should a difference of opinion or interpretation arise, HKMB HUB will act as your advocate directly with the insurer. Please advise HKMB HUB of any discrepancies as early as possible. Action against your insurer is forfeited after a certain period of time has elapsed following the loss.
For classification purposes, this material is broken down into Property (Fire, Boiler, Theft), Employee Dishonesty, Transportation, Business Interruption, General Liability and Automobile.
Insurance claims in Canada are paid net of GST for all but exempt industries. The adjuster will therefore establish your GST status at the very outset of the claims settlement process.
Property Losses
Keep in mind that you are responsible for proving loss and thus, will be required to supply facts and documentation.
- Notify HKMB HUB and report the following:
- Date and time of loss
- Cause of loss
- Property location
- Loss estimate
- Persons to contact and telephone numbers
- You will also need to:
- Take the necessary steps (temporary repairs etc.) to protect and preserve property.
- Separate damaged and undamaged goods and prepare an inventory listing of all items.
- Meet with the adjuster. Verify the damage, and if possible agree on the severity of the repair and/or rebuilding figures.
In case of Property Loss:
DO - When losses are severe, avoid premature guesses, overly optimistic evaluations or quick settlements. Obtain several estimates of repair or replacements. Even reputable building contractors can vary substantially in estimating the same job.
DO - Seek approval from the adjuster if you want a specific contractor to do the work. Normally the adjuster will obtain and pay for two or more estimates from contractors.
DO - As the loss adjuster proceeds, consult with HKMB HUB for advice about preparing your claim. HKMB HUB will also assist you in your negotiations with the adjuster.
DO - Keep separate work sheets and files on all details; insist on detailed invoices for all loss expenses.
DO - Ask permission to begin salvage efforts immediately. The adjuster will then inform you of what the insurer's position will be. The adjuster will help obtain salvage bids and you normally will have the option of buying the salvage for the lowest bid.
DON'T - Begin to remove damaged property until the adjuster has verified and examined it, except to protect the property from further damage. If safety or production necessitates immediate repair or removal, take pictures and document the damage as well as possible.
DON'T - Expect immediate payment. Your insurance contract has conditions to be met and you must prove your loss. In case of hardship on larger losses; HKMB HUB may be able to arrange an advance partial payment, although there is no contractual obligation on the part of the insurers to comply.
DON'T - Give away the damaged property, it may belong to the insurers.
DON'T - Plan on abandoning the property to the insurance company. The insurers have the option of repairing under the contract.
DON'T - Submit loss in lump sums; you will only be asked for a detailed breakdown.
DON'T - Expect a standard fire policy to cover all losses and expense. Typical examples of expenses that are normally not covered are:
- Claim preparation expense
- Loss of profit and expediting expense (this can be insured against by a business interruption policy)
- Loss of artistic and sentimental value.
The final form for claim filing will be a notarized Proof of Loss. Under the statutory policy conditions, the insurer has 60 days to pay. Most insurers will respond almost right away.
Employee Dishonesty Losses
A special type of property loss, which may be covered under a separate policy.
Burden of proof remains with the Insured. You will have to prove the loss is either theft/burglary by an outsider or a dishonest act by an employee.
Inventory losses are more difficult and require conclusive proof, which is not to be based upon an accounting calculation/inventory computation. The insurer takes his position knowing inventory shortages can be caused by over 100 reasons of which employee dishonesty is only one.
The following aspects should be examined in providing proof of loss:
- There must be some specific evidence of dishonesty
- The type and reliability of inventory accounting records. Quality records will carry more weight when proving loss.
- A direct and reasonable correlation must exist between evidence of dishonesty and evidence of amount of loss. Could the inventory be physically removed and disposed of in the time frame?
- The quality and circumstances of the confession if any. The confession should be enough to corroborate other evidence.
- If criminal charges are pending, the proceedings must be consistent with nature and extent of claim.
Transportation Losses
Property in transit (other than ocean) that is in the custody of Carrier, Warehouseman or Bailee requires different loss settlement procedures although most of the property section requirements still apply.
The insurer will only pay after you have made reasonable efforts to collect from the Bailee (other than litigation), evidence of which you must provide.
If the Bailee fails to pay your claim within a reasonable time, you must notify the insurer, prior to the expiration time for instituting suit against the Bailee, as provided in the Bill of Lading or Receipt.
You may not enter into any special agreement with a Carrier or Bailee releasing them from their common law or statutory liability.
The insurer will not be liable for loss settled or compromised without its written consent.
Insurance will not respond directly or indirectly to the benefit of any Bailee or Carrier.
Business Interruption Losses
Many clients have a form of Business Interruption coverage. It is intended to reimburse you for the income statement effect of an insured loss. Coverage may also be expressed as the profit and continuing expenses that would have been earned, expediting expenses and any extra expense to reduce the loss (to the extent the loss is actually reduced).
Unlike property damage, a business interruption claim is composed of intangibles. You are presenting a claim for what you think your business would have done in a specific period usually known as the period of indemnity.
The starting point is sales. The shorter your interruption, the more difficult it is to substantiate a loss of sales. In some cases a loss of production may not mean a loss of sales because of inventory positions.
It is not unusual for a business interruption loss to remain open for a long period of time so that the actual revenue reductions are known.
DO - Resume complete or partial operations of the property, utilize other facilities if economically feasible to do so and make use of new stock, stock-in-process or finished stock. The policy requires you to do so if possible, but it will not pay you in total more than what the loss would have been if you had not made up any of the production.
DO - If possible, communicate with the adjuster to get approval of expediting charges or extra expenses before going ahead.
DO - Have available production schedules, sales records and projections, detailed cost analysis and profit and loss statements.
DO - Seek an outside accountant for assistance if necessary to help you develop your loss calculation. Cost of their services may be covered.
DON'T - Make decisions on your labour force before determining existence and extent of coverage for these costs.
Liability Losses
Your legal liability for third-party losses may ultimately be as the courts will hold it to be based upon the facts.
This coverage is not a customer or public relations tool. The insurer will be admitting or disclaiming liability on your behalf.
The claims handling process for liability claims will be more efficient if you:
DO - Report all incidents which may give rise to a claim to HKMB HUB immediately.
DO - Get the claimant's name, address, and telephone number. If there are any witnesses make sure to get their names, addresses, and telephone numbers.
DO - If an ambulance was called, write down the name of the ambulance company and the hospital and be prepared to describe how the accident occurred.
DO - Give all the information to your insurer.
DO - Remember to send reports to your insurer in the event that additional witnesses surface after you have filed your initial report.
DO - Send lawyer's letters, writs or other law suit papers to the insurer or HKMB HUB immediately. Most writs require an immediate response.
If your product is involved:
DO - Tell HKMB HUB how the claim was presented, i.e. by letter, phone, by the claimant or by a lawyer.
DO - Find out exactly what product is involved in the claim, identify its serial number and its precise current location.
DO - Gather all the information you have on the history of the product to use as documentation in case of a law suit.
DO - When a claim has been made against you, send all pertinent information to HKMB HUB or to the insurer by registered mail only.
Generally:
DON'T - Discuss the accident with anyone except HKMB HUB, your lawyer or the representative of your insurer.
DON'T - Admit liability or responsibility to anyone.
DON'T - Offer your opinion of liability to anyone.
Automobile Losses
The Ontario Motorist Protection Plan reformed Automobile Insurance in Ontario effective June 22nd, 1990 which was subsequently revised by Bill 164 effective January 1st, 1994 and by Bill 59 effective November 1, 1996.
These amendments to the Insurance Act of Ontario provide for "no fault" settlement of all bodily injury losses except for:
The injured person has died or has sustained:
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Permanent serious disfigurement; or
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Permanent serious impairment of an important physical, mental, or psychological function.
For less serious injuries, the right to sue has been forfeited in exchange for enriched income replacement and medical/rehabilitation benefits.
For collision losses, you will recover from your own insurer. To the extent you are at fault, you will pay that % of your collision deductible.
There is absolutely no provision for subrogation under any circumstances with the following exception:
Loss transfer may occur between insurers for recovery of No-Fault Benefits only where the vehicle at fault exceeds 4500 kg in gross vehicle weight and is used to carry goods and equipment. Buses do not fall within this definition.
It is essential that a driver involved in an accident which is not his/her fault, obtain complete details of the other party's insurance coverage (insurer, policy number, expiry date and broker's name). Failure to obtain this information could result in your own insurer charging this claim as an "at fault accident" which will effect your collision deductible and future rating.
DO - Use the "Accident Service Kit" as provided by HKMB HUB or your insurers for the vehicle glove compartment as a guide for action at the accident scene.
DO - Remember that all accidents must be reported in writing to your insurer
DON'T - Obtain substitute automobile without confirmation from your insurer.
DON'T - Begin repairs to your vehicle unless authorization has been obtained.
Reasonable Person - a normally intelligent and alert person who exercises an ordinary degree of reason and foresight and whose conduct or conclusions are used as an objective standard.
