May 25, 2019

5 Tips for Negotiating First-Party Property Claims

Against the backdrop of stalled budget talks and government shut-down, we can see an example of unsuccessful negotiations in Washington D.C.  Adjusters are thrust in the role of negotiator frequently, as part of their jobs. 

Negotiate

            Claim negotiating nuances arise between third- and first-party claims, subtleties which the claims rep should observe.  The negotiating context is different with each.  Let us examine some the special contextual factors which distinguish first-party claims.  Appreciating these factors will help claim representatives steer clear of potential land-mines in negotiating such losses. 

            #1 Be flexible.  One initial consideration:  with first-party claims, you may have to be a little more flexible.  Reason: you have a contract with the individual with whom you are negotiating.  He or she is the person helping to pay your salary via premium payments.

            #2.  Give the insured the benefit of the doubt when possible.  For gray area cases, you may have to bend over backwards, giving the insured the proverbial — and literal — benefit of the doubt.  You don’t think that the insured’s expenses at the Ritz Carlton constitute reasonable “additional living expenses”?  You question whether the insured needs an entire kitchen remodeling job following the grease fire?  If it is a close call, then you may need to be more yielding and swallow your doubts.  Of course, if it’s a case of fraud or blatant “padding,” then by all means dig in your heels.

            Courts are more likely to hold you to a rigorous standard of punctilio in dealing with policyholders than with third-party claimants.  While all policyholders or claimants are entitled to good faith treatment, this is not a black-and-white issue.  There are subtleties and gradations of good faith (and bad faith!).

            #3.  Act in good faith and beware of the bad faith boogeyman on first-party claims.  In other words, you do not have the “general damages” component in first-party claims which you typically have in third-party losses.  Insureds do not claim pain and suffering, unless they file a bad-faith lawsuit against you, in which case they can seek extra-contractual damages.         This is an important area, for bad faith is much more prevalent in first-party than in third-party claims.  Courts often say that the adjuster or insurer has a higher duty of care to the premium-paying policyholder than to a third-party claimant.  In some states, third-party claimants cannot bring bad faith actions.  Thus, on first-party claims you must take any bad faith threat very seriously and make sure that you dot all “i’s” and cross all T’s. 

            #4.  Be prepared to negotiate.  The adjuster’s negotiation of first-party and property claims is strengthened by knowledge of the FACTS, a good investigation and a firm command of the insurance coverage and policy provisions.  Preparation cures most ills when it comes to claim negotiations.

            #5.  Be alert to high-profile situations.  Be alert to cases of unusual sensitivity, where adjusting property claims will involve special considerations.  Such circumstances might include:

            *  claims made by celebrities or semi-famous persons

            *  claims made by VIP accounts, long-standing accounts or big premium payers

            *  claims made by individuals who are in media or politics, and who could make your life miserable if they feel they are being mistreated

            *  claims involving employees of the insurer (due to the touchiness of these situations, some insurers decline to write coverage on the property of their own employees),

            Use these tips to navigate first-party property losses, whether you’re handling a house fire or water damage claim. 

            Q:  What tips or techniques have YOU found effective in negotiating first-party property losses?  Post here or share your thoughts offline at kevin@kevinquinley.com   

 

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