The Five Dimensions of an Insurance Claim

When you buy insurance you hope for the best (no losses) and plan for the worst (loss and claim).
As I mentioned in my January, 2014 post, contracts and carriers are different when it comes to handling the five dimensions of a claim:

1. Documentation

Average carriers might require time-consuming detailed documentation for each loss item. Top carriers will require limited documentation.

2. Valuation

Average carriers might value losses at depreciated value or conditional replacement value. Top carriers will value losses at true replacement value or the cash value you agreed to in the contract.

3. Materials

Average carriers might try to get by with builder standard or aftermarket parts. Top carriers will use comparable materials, OEM parts or a cash-out option.

4. Services

Average carriers might give you an economy replacement vehicle. Top carriers give you a comparable vehicle.

In the event of a lawsuit, average carrier lawyers might drag things out to avoid carrier losses. Top carrier lawyers are incentivized to settle to maintain their claims reputation.

5. Attitude

Average carriers might become adversarial. Top carriers are helpful and responsive. Why these differences between carriers? Much of it has to do with the structure of the insurance industry.

Let’s say you’re with a carrier for ten years with no claims and you’re asked about claims service. You don’t know. Or perhaps you’ve had a few claims and are asked how your claims service compares to that of other carriers. You don’t know that either. If you have a captive agent (sells for one company) he doesn’t know either, he only sells for one company. Nobody knows. As a result, direct writers don’t compete on claims service. They compete on price or goofy advertising.

Now let’s say you have insurance through an indirect writer (carriers that sell through independent agents like me). You still may not know about claims service quality, but somebody does…me! Indirect writers need to be thoughtful about claims because independent agents see how claims are handled across many carriers, including direct writers. If we start feeling our carriers aren’t fair we’ll simply stop using them and use other carriers with better claims reputations.

If you buy insurance through Desert Insurance Solutions, you’re getting insurance through carriers with above average claims service. That’s my job.

Your job is to avoid frequent small claims. If you have several small claims your carrier will tag you as a problem customer and might raise your rates or decline to renew. And if you’re not going to make small claims don’t pay for the right to do so with a low deductible: maintain high deductible and use any saves to ensure high limits…sweat the big stuff!

This site is informational and not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.