Your Insured Suffered a Loss: Now What Happens?

insurance continuing educationLet’s say one of your clients trips at work and is injured, or another one accidentally runs a red light and hits an oncoming car, or maybe a windstorm tears away part of someone’s roof, letting the rain and debris come into their home—what should they do?

As an insurance agent, you should explain that when your clients buy an insurance policy, they’re buying a promise from an insurance company: they’re paying a small amount of money to protect themselves, their family, or their business against a much larger loss. So what happens when that loss occurs? Although insurance policies can vary, the Duties After Loss clause in a policy tends to be fairly standard.

The Duties After a Loss clause specifies what a person must do in order to recover for losses covered by the policy. Most insurance companies have no duty to provide coverage unless there has been full compliance with the following duties: The insurer must be notified promptly of how, when, and where the accident or loss happened. Notice should also include the names and addresses of any injured persons or witnesses.

When you sell or renew an insurance policy, it’s a good idea to remind your clients that insurance is a two-way street when a loss occurs. Insureds must comply with the policy’s rules if they want the policy to provide coverage and the insurance company to pay for the loss.

Let’s look at a couple of examples.

  • Assume your insured is injured at work, what should he or she do first? An employee should notify a supervisor about the injury and the way in which it occurred, as soon as possible. An injured employee who fails to inform his or her employer, in writing, within 30 days after the date of the accident causing the injury, may lose the right to workers’ compensation benefits.
  • Assume your insured is involved in a car accident, what should he or she do first? If they have a cell phone, they should call 911 and ask for police assistance and, if needed, emergency medical personnel. If they think someone may be injured, they should request an ambulance. If there is any indication that your insured might be injured, recommend that they agree to be transported to the hospital by ambulance.
  • Assume your insured calls to say their part of their roof blew away and rain is coming in. The first step is to take all “reasonable” steps to protect the property from further damage. This could mean putting a tarp over the hole or maybe taking furnishings out of the room to protect them from further rain damage. However, it may not be reasonable to expect the insured to climb up on the roof, but a tarp over the furniture might prevent further damage.

Depending on the type of loss and type of insurance policy, the insured may have to take an inventory, notify the police, notify the insurance company promptly, provide specific details about the loss, and provide proof of loss. In all cases, the insurance company will expect the insured to cooperate while it is adjusting the loss. This means the insured must provide access to damaged property and may be required to assign subrogation rights to the insurance company. This means that the insurer assumes the right to pursue damages against the at-fault party, if people other than the insured are involved.

Want to know more about an insured’s duties after a loss? Check out our property and casualty insurance continuing education classes.

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