Dada Adefolami

By Dada Adefolami

Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder.

In insurance, the insurance policy is a contract generally a standard form contract between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.

Your insurance policy will compensate you for financial loss. This can include replacements, repairs and even your lost profits.

A business owner’s policy (also business owner’s policy, business owners policy or BOP) is a special type of commercial insurance designed for small and medium-sized businesses. By bundling general liability insurance and property insurance into a single policy, BOPs typically offer a reduced premium, often making them a more cost-effective option than separately purchased policies.

An actuary is a business professional who deals with the measurement and management of risk and uncertainty. The name of the corresponding profession is actuarial science. These risks can affect both sides of the balance sheet, and require asset management, liability management, and valuation skills. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms, however Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions. Actuaries are professionals who are qualified in this field through intense education and experience. In many countries, actuaries must demonstrate their competence by passing a series of thorough professional examinations.

But insurance cannot guarantee that your customers will wait while you get your business back on its feet. You need to minimize the business disruption by ensuring quick and full settlement of your claim.

You have to probably make a claim on an insurance policy at some stage, briefing looks at:
1. What to do when you suffer a loss.
2. How to make a claim.
3. What your insurer will require you to do.
4. How to speed up the settlement.
5. Why your claim may not be met in full.

Insurance claims are a notification to an insurance company that payment of an amount is due under the terms of the policy. It is a request for payment of the contractual benefits by the insurer that is made by the insured or the beneficiary

Claims Insurance is a formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insuranceclaims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.

In insurance analysis, morale hazard is an increase in the hazards presented by a risk arising from the indifference of the person insured to loss because of the existence of insurance. Insurance analysts distinguish this from moral hazard. The use of the term in this way dates back to at least 1968, when it was used in the fourth edition of Casualty Insurance.

Suffering a loss
Make sure that you are alerted to any losses as soon as possible.

Give full contact details of your keyholder to your alarm company.

You should also give home telephone numbers to neighbouring businesses who you know, so that they can notify you if they spot a problem.

Ask employees to report any breakages, accidents, theft or other losses immediately.

Notify your insurance broker (or other insurance intermediary) or your insurer immediately that you have suffered a loss. Keep a log of any phone calls and copies of correspondence.

Insurers require you to take immediate steps to minimize losses, and to report any claims within set time limits. If you do not comply, your claim could be lost.

Many Insurance have 24-hour helplines so you can notify them immediately and get advice on what to do next.

In the case of theft, immediately report it to the police as well. Otherwise your claim will be severely weakened.

Keep evidence of compliance with any warranties.

Take photographs or video footage of items such as fire extinguishers, locks and alarms.

Agree an action plan.
1. Check on what you must and must not do next. For instance, you may be asked to leave flood-damaged stock where it is, pending an insurance assessment.
2. Confirm when you can expect a response from your insurer. You will then know when you can start chasing your claim.
3. Ask for an estimate of how long it will take your insurer to settle your claim.

Take action to prevent any further losses.
1. Your policy may stipulate that you should take certain actions.
2. Most insurers will have a list of 24-hour emergency repair services.
3. Premises must be secured as quickly as possible in the event of damage to windows or doors, burglary, fire or flood.
4. If there is water damage, clean up and dry out damaged goods, equipment or buildings .

In the case of major disruption, put your disaster recovery plan into action.

minimizes disruptions to your business while your claim is being settled.

1. If you cannot deliver supplies for weeks or months because you have no disaster recovery plan, your business could fail.
2. If you do not have a disaster recovery plan, ask your insurance adviser and your insurer for advice on this matter.

In insurance, underwriting is to sign and accept liability and guaranteeing payment in case loss or damage occurs. Underwriting is provided by a large financial service provider such as a bank, insurer or investment house.

Note that Inland marine insurance indemnifies loss to movable or specialized types property, historically developing as an outgrowth of ocean marine insurance.

Business interruption insurance (also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.

Making a Claim
For your claim to be accepted and paid in full, you must follow the following procedures.

1. Check your policy to make sure you are covered for the specific loss suffered.

For example, you may not be able to claim for a computer theft if the thief could simply walk into your office. Your policy may only cover burglary, which requires forced entry to the premises.

2. Assess your loss to make sure you are claiming for the full costs of repairs, replacements or financial losses. Once your insurer has settled the claim, you will not be able to go back to ask for more.

3. If you cannot put a value on your claim, ask your insurer, broker or a professional loss assessor for advice. Many insurers provide 24-hour helplines.
4. Keep the receipts for any incidental costs, such as additional cleaning following a flood or the cost of equipment rental following a fire. You may be able to add these costs to your claim.

Find out as much as you can about the circumstances surrounding the claim.

1. Your insurer will want to know how, when and where the loss occurred.

For example, if you were taking your day’s takings to the bank and were mugged, you should give details of the time, place, which police station was notified, the crime number and witness contact details.

2. Provide your insurer with all the specific information that is requested.

Your insurer or insurance broker will usually send you a claim form.
Ask them or your loss assessor for advice on filling out the form. Your claim may be delayed or rejected if you give incorrect or insufficient information.

Claims Processing
Your insurer will not agree to any repairs, replacements or financial compensation until satisfied that your claim, and the amount claimed, are genuine.

Simple claims are settled more quickly. Provide your insurer with as much detail as possible. Below information’s will help speed up your claim.

1. If your claim is for a broken shop window or a damaged car and the insurer has an approved repair firm, the work may be done in a matter of hours. You may not even have to fill in a claim form if the insurer settles directly with the repair firm.
2. Claims for theft, fire or flood will usually be settled in weeks or months.
3. Litigation, such as liability claims, is governed by the Civil Procedure rules, with timescales laid down for every stage of the process.

You must inform your insurer immediately if a claim is being made against you.

Your insurer will check your claim form to ensure as :
1. Your loss is covered by the insurance policy and is not specifically excluded.
2. You have provided all the information that is required.
3. Your policy is still valid and you have paid your premiums.
Your insurance company may appoint a loss adjuster to visit your business to advise you on what to do to get your business running smoothly again.

The loss adjuster will check that:
1. You are not claiming too much or too little.
2. You have met the terms and conditions of your policy, including compliance with all warranties.
3. You are not underinsured.

The loss adjuster or insurer may then ask you to provide additional information. For example:

1. Receipts or other proof of purchase.
2. Proof that regular maintenance and safety inspections were undertaken.
3. Evidence that the claim is for an insured risk if this is in doubt.
For example, contamination caused by a hazardous chemical spillage is usually excluded by insurance policies.

Potential Pitfalls
Your claim may not be met in full. It may even be completely rejected. Unfortunately you will only ever discover that your insurance was inadequate when you come to make a claim.
In order to make the most of any claim after the event, there are a number of things you should check when placing your insurance cover.

1. When choosing an insurer, do not just compare premiums. Compare the scope of cover provided, as well as additional services such as a 24-hour helpline.
2. Check that you comply with your insurer’s terms and conditions.
3. Did you meet the disclosure requirements?
For example, failure to declare past burglaries or other relevant facts could lead to your claim being rejected.

Did you meet the security and safety requirements? For example, switching on your burglar alarm, keeping the premises secure and keeping cash in the safe.

1. Check that you are not underinsured.
2. Are your buildings, equipment, assets or profits insured for the correct amount?
Your claim will be reduced in proportion to the amount you failed to insure for.

Check that you will be paid the full replacement cost, known as ‘reinstatement’.

1. Insurers will pay either a cash amount equivalent to replacing the damaged or destroyed property ‘as new’ or pay for work to be carried out to bring the property back to its original condition.
2. In both cases, the amount paid will not exceed the sum insured.

· Most policies have a ‘betterment’ clause which excludes the full cost of replacing lost or damaged assets with better ones.

For example, replacing your six year-old cash tills with two (much better) new ones.

This is betterment and you may have to pay towards the cost of the upgrade.

You may have to adjust your insurance cover to replace equipment that becomes obsolete rapidly, such as computers.
1. Replacing equipment that is no longer available can be a major problem.
2. Check how much you must pay towards each claim — the policy ‘excess’.
For example, you may have to pay the first N1,000 of any claim you make.