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Time Is Money! How Shelving That Claim Hurts Your Bottom Line

Posted by Jeffrey Forbes on Mar 18, 2015 9:00:47 PM
Time consuming or worse when you delay filing an insurance claim
It’s easy to put issues to the side, particularly when a person is facing a large number of competing priorities. Putting a problem off to later is even easier when it’s an unpleasant task. Our society is full aphorisms warning us to the difficulties of procrastination.

 “A journey of a thousand miles begins with a single step.”

“Never leave to tomorrow that which can be done today.”

“Well begun is half done.” 

Procrastination can be a major problem in a lot of different areas of life. It can be particularly pernicious in the filing of insurance claims. A number of fears and concerns can motivate companies and individuals to put off the filing of an insurance claim. However, these delays can negatively impact the handling of the claim, sometimes even creating self-fulfilling prophecies.

Why do people delay in filing insurance claims?

There are many reasons:

  • Policy holders can fear the policy increases that come with insurance claims.
  • They may hope that events subsequent to the incident giving rise to the claim will make the filing of the claim unnecessary.
  • Maybe an injured party will fail to follow through with seeking reimbursement as one example.
  • Alternatively, the policy holder might wait, waiting for more information to become available before filing the claim.

An example might be waiting to file a claim until they are 100% certain damages exceed the deductible or wait for an investigation to show the policy holder is at fault. Sometimes, the answer is as simple as the appropriate department within a company responsible for reporting the claim being short-handed and over-worked.

Unfortunately, delaying the reporting of an insurance claim can have several negative consequences. Many policies contain requirements that insured notify the insurance company of potential claims immediately or as soon as possible. Delaying too long might give the insurance company the legal wiggle room to deny a claim straight out.

READ MORE: How To Speed Up The Claims Process In 6 Steps

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Additionally, policy holders have obligations to mitigate or minimize subsequent damage from a loss. Failure to report a claim might lead to an increase in damages at the same time it gives the insurance company a reason to decrease their loss. As an example, imagine a case of theft involving a broken window. Prior to the policyholder taking any action, including reporting loss or covering the window but after several days have passed, a rainstorm hits the area and the inside of the property is damaged as a result of the failure to cover the window. An insurance company might be within its rights to deny any payout for the damage caused by the failure to cover the window even though the original incident that broke the window would be covered.

Reporting a claim quickly and promptly also ensures that the policy holder and the insurance company are actively engaged in a strategy from the beginning. Early investigation into losses can be vitally important to minimizing damages paid to injured parties when they are not the insured. Contacting potential witnesses while the incident is still fresh in their mind can give the claim handlers a good start in their investigation. Additionally, having the claims adjuster involved while initial estimates are being calculated can help prevent those totals from becoming inflated by the injured party or by service providers such as towing and storage firms or restoration firms.

Ultimately, policy holders have little to gain by delaying a claim filing, but the losses can increase by thousands of dollars, if not more.


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Topics: Safety At Work, Claims, For Your Business, Property Management