Occasional severe injuries are an unfortunate part of the construction business. When they happen, a contractor may be looking at a very large lawsuit and will seek coverage under its liability insurance policy. Undesirable side effects of liability insurance claims include disputes between the contractor and the insurance company. Bad feelings can begin with the claim notice from the contractor, build with a letter from the claim adjuster listing every policy condition that might mean no coverage for the claim, exacerbate when the adjuster balks at the defense attorney’s bills, and erupt during negotiations over a settlement.
A contractor cannot control a claim adjuster’s actions, but there are things that can be done to influence the adjuster’s behavior for the better, minimize areas of disagreement, and make the whole process a little smoother.
Claim adjusters find it frustrating when they receive initial claim notices that provide limited information. When giving the initial notice of a liability claim to its insurance company, the contractor should provide at minimum the following information:
* Basic information, such as the date and location of the loss, names of injured persons, nature of injuries, and so on.
* If the contractor has already hired defense attorneys, an explanation of its reasons for selecting that firm. For example, a particular firm may have significant experience defending contractors of the same type; the notice to the insurance company should state that.
* A statement of what the contractor expects from the company during the claim process. This should present several questions for the company to answer, such as whether the attorneys will act as the conduit for information between the contractor and the company, whether the company will hold an early meeting with the contractor to discuss the case, and the confidentiality of certain communications.
It is a good idea for the contractor to seek an in-person meeting with the claim adjuster within the first few months after making the initial notice. This meeting will separate the contractor’s claim from the dozens of other cases on the adjuster’s desk. It will facilitate exchange of information, introduce the adjuster to the attorneys, educate the adjuster about the case, and allow both sides to discuss their expectations for the claim process, such as frequency of updates and the payment schedule for the attorneys.
Even with a detailed initial notice and an early meeting, disputes between the contractor and the company may still arise. If the two parties can specifically define the issues, they can limit the disagreements and focus on producing a successful claim resolution. Even if they disagree on whether the policy will cover the claim, a specific description of each side’s concerns can help narrow the areas of disagreement and reduce uncertainty. Therefore, it is in the contractor’s interest to be specific about its questions and concerns in all communications with the company. This should give the company an incentive to be clear about why it might not cover the claim. Armed with this information, the contractor can more easily decide how to proceed next, whether that will be to mediation, appeals to the company’s management, litigation, or other alternatives.
During this process, the contractor should not overlook his insurance agent as a resource and advocate. Agents deal with claim situations on a daily basis and can provide valuable information on what to expect and ways to make the process easier. Workplace injuries are upsetting and disruptive; ensuing lawsuits are stressful and take a contractor away from his real business. Following these steps can reduce the amount of stress and help bring the claim to a conclusion that all parties can live with.