In the world of insurance, timely reporting of claims is a non-negotiable requirement, not just a recommendation. For agents and brokers, ensuring that clients fully understand their obligations under a claims-made policy is essential to preventing claim denials and maintaining strong relationships. Unfortunately, many insureds delay reporting claims—whether due to uncertainty or the hope that the issue will resolve itself. But this delay can lead to costly consequences, including outright claim denials and reputational damage.
At DOXA, we understand that claims-made policies demand extra diligence in reporting. We’re here to help retail agents navigate the complexities of this coverage type, ensuring their clients stay protected and compliant. Here are three key steps to help insureds avoid costly coverage pitfalls—and how DOXA can support you in these efforts.
1. Understand the Policy Inside and Out
The first and most crucial step to ensuring timely claims reporting is understanding the policy’s specific terms and conditions. Unlike occurrence-based policies, which cover incidents that happen during the policy period, claims-made policies only cover claims reported within the policy period (or during any applicable extended reporting period). This means that knowing the reporting requirements is essential.
Key elements to review include:
- Definitions of a Claim: Policies often specify what constitutes a claim, including lawsuits, written demands, regulatory investigations, or circumstances that could lead to a claim.
- Reporting Timelines: Claims must typically be reported “as soon as practicable” or within a specific timeframe, which varies by policy.
- Notice Procedures: The method and timeline for reporting claims must be clear to avoid delays.
DOXA provides agents with the tools and resources they need to educate clients on these requirements, ensuring they are well-prepared to meet their reporting obligations.
2. Establish a Strong Claims Reporting Protocol
A structured claims reporting protocol is essential for ensuring timely notice. This should include:
- Internal Procedures: Designate a claims coordinator within the insured’s organization who is responsible for identifying and reporting claims. Establish a standardized process for recognizing potential claims and escalating them when needed.
- External Communication: Maintain clear communication with insurers by documenting all claim-related communications. Encourage clients to seek advice from brokers or risk management professionals when necessary.
Delays often occur when insureds hesitate to report claims, fearing premium increases or policy non-renewals. However, failure to report a claim within the required timeframe can result in outright denial. DOXA’s risk management solutions help agents and brokers educate clients on the importance of erring on the side of transparency, ensuring that even potentially minor incidents are reported.
3. Keep Communication Open After the Notice Is Given
Once a claim is reported, the communication doesn’t stop there. Insureds must maintain ongoing cooperation with insurers throughout the claims process. Many insureds mistakenly believe that simply reporting the claim is the final step, but consistent communication is critical to ensuring a smooth resolution.
Best practices for post-notice communication include:
- Initial Meetings: Set up calls with the insurer, defense counsel, and insured to establish expectations and review case details.
- Regular Updates: Keep the insurer informed of case developments with scheduled updates and documented communications.
- Timely Documentation: Provide all necessary documents, such as legal notices, financial records, and settlement discussions.
Failing to communicate effectively can lead to unintended coverage issues, like a claim denial due to non-cooperation. DOXA helps agents and brokers emphasize the importance of transparency and quick responses to prevent such outcomes.
Why Timely Notice Is Crucial: Legal and Financial Ramifications
One key consideration with claims-made policies is the legal principle of prejudice. In occurrence-based policies, insurers typically must prove that late notice caused material harm to deny coverage. However, in most jurisdictions, claims-made policies allow insurers to deny claims solely based on late reporting—without needing to prove that the delay harmed their ability to investigate or defend the claim. This makes timely notice even more critical.
The strict nature of claims-made policies underscores the importance of agent involvement. By proactively educating insureds on the severe consequences of late notice, agents can help prevent costly errors and coverage denials.
Bottom Line: Protect Clients and Strengthen Relationships
Ensuring timely claims reporting under a claims-made policy requires vigilance, proactive education, and risk management. Agents and brokers who prioritize these efforts can provide exceptional value to their clients while avoiding unnecessary coverage disputes. By thoroughly understanding policies, creating clear reporting protocols, and maintaining consistent communication, insureds can avoid claim denials and financial hardship.
At DOXA, we’re committed to helping agents and brokers navigate the complexities of claims reporting and coverage compliance. Our tailored solutions and expert guidance ensure that your clients remain protected and informed throughout the process.
Connect with DOXA today to learn more about how we can support your claims management efforts and help you build stronger relationships with your clients.
