A question commonly posed to insurance professionals is, “Should I file a claim?” Despite different schools of thought, the answer ultimately is, “It depends.” Most policyholders will see this statement or a version of it in their insurance documents: “Duties After Loss or Occurrence.” You might see it several times, depending on the type of coverage you have.
In the case of a “loss” or “occurrence,” you or another insured party are expected to perform these duties:
- Submit written notice to the insurance company or agent as soon as practical.
- Notify the local police of a theft.
- Cooperate with the insurer in any investigation, settlement or defense of a claim or lawsuit.
- Send within 60 days of the insurer’s request a signed, sworn proof of loss to the best of your knowledge and belief.
- Promptly forward to the insurer every notice, demand, summons or other process relating to the loss or occurrence.
Your insurance company has no duty to provide coverage if you fail to comply with those duties.
Speak Up
If you reasonably anticipate filing a claim, remember that you are contractually obligated to notify the insurance company. If you remain silent and don’t cooperate with a subsequent claims process, the insurer might deny your claim and cancel your policy.
Several years ago, someone was injured at my client’s business. He filed a claim but refused to work with the insurance adjuster to determine the cause of the injury, wouldn’t allow the adjuster to interview employees, and blamed the injured party, alleging the incident didn’t occur there. The insurance company ultimately settled with the victim but canceled the policy because of the owner’s failure to cooperate in the investigation.
Sometimes, filing a claim is unnecessary, and at other times, a wait-and-see approach is best. However, here’s a disclaimer: Contact your insurance agent or carrier to discuss the circumstances behind a potential claim.
Should you file a claim? My standard answer is, “It depends. Tell me more.”
Property Claims
Here are a few insurance events that tend to happen at veterinary practices:
- Spoilage claims when a vaccine refrigerator goes out.
- Water damage from a sewer backup or roof leak.
- Hail or wind damage.
- Dental X-ray equipment damaged by dogs. (Apparently, dogs love to chew on expensive radiograph devices placed in their mouths.)
With those types of losses, I generally recommend getting a damage estimate before filing a claim. Gone are the days of $500 commercial property insurance deductibles. What’s common now is $1,000.
Suppose your business insurance has a $5,000 deductible and a dog caused $6,500 in damage to X-ray equipment. You cover the first $5,000 of your claim out of pocket and the insurer pays the remaining $1,500. I recommend the practice owner not file a claim in this case.
“But, Bill,” you say, “you told me I have a duty to notify the insurance company of a loss.” Yes, you are obligated to report a loss, and 80% of the time you will file a claim. However, in this instance, paying out of pocket might be a good idea.
In cases of vaccine spoilage, water or hail damage, and many other types of property loss, getting a repair or replacement cost estimate will help you decide whether to file a claim. You almost certainly will file one when the damage exceeds the deductible by a significant amount.
General Liability Claims
At many veterinary practices, the greatest exposure to a liability claim involves slip and falls. In Northern states, they usually occur in the wintertime due to slick sidewalks and icy parking lots. File a claim immediately when a slip and fall causes a serious injury.
Most practices carry at least $1 million in liability coverage for cases in which they’re found negligent. Even if you did everything within your control to prevent injury or damage, your insurance carrier might settle a claim to prevent a potentially costlier settlement or court judgment.
Workers’ Compensation Claims
I recommend filing a workers’ compensation claim within 24 hours of an employee injury that involves medical treatment. A claim might be legally required depending on your state’s statutes. Documentation is key, so complete an incident report even if the team member doesn’t seek medical treatment, and report the incident to the practice leadership team on the same day.
The sooner a workers’ compensation claim is filed, the lower the claim’s potential cost and hopefully, the lower your annual premium.
Veterinary Professional Liability Claims
We all know that veterinary clients can be passionate about their pets. In cases of poor clinical outcomes, a lot of anger and threats might ensue. In those cases, you can take a wait-and-see approach to a potential claim.
Never engage with an angry client on social media or by phone or email because the interaction might antagonize the pet owner into taking further action. Answer questions when asked, but don’t say more than necessary, and don’t get sucked into heated interaction.
That said, file a claim when an obvious treatment error occurs. Sometimes a “notice only” claim may be filed so your insurance company can document your side of the story while the issue is fresh. Notice-only claims should be filed if you reasonably expect the pet owner to take further action.
A notice-only claim applies to professional liability policies. It puts the carrier on notice that an incident might turn into a claim but isn’t one quite yet. The insurance carrier can offer valuable advice to prevent the incident from rising to a claim.
Insurers truly care for policyholders the same way you care for patients. If you file a claim, work with the carrier, not against it, because you have a contractual duty to assist in the investigation. The more you fulfill your duty, the better your experience. Insurance providers cut the checks after all. The more help you provide, the faster claims payments occur and the better your defense in a lawsuit.
5 TIPS
- Obtain an estimate: Knowing the cost of repairing or replacing damaged property before you potentially file an insurance claim is a good idea. Take into consideration your deductible and coverage limits.
- Document: Keep excellent track of your inventory, equipment and business property so you don’t have to search for or generate the information at the time of a claim.
- Don’t admit fault: It’s human nature to apologize when a third party is involved. Even if you were 100% at fault, don’t admit it or offer to take care of the problem. Don’t make any payments without talking to the insurer first or promise your insurance company will handle the matter.
- File claims promptly: Mandate the completion of injury reports the same day an incident occurs, even if medical treatment isn’t required. With catastrophic property losses or large claims, your insurer can assist in the recovery process.
- Seek advice: Asking your agent what to do and how an event will affect your insurance is a good idea. Insurance agents who understand the veterinary industry know the ins and outs of your business.