In the event of a claim, professional loss assessors are vital to the claimants in order for their best interests to be sought, says Henry Harris, president Harris Claims Group....

The experience and expertise of the Loss Assessor is only gained by continuously dealing with claims on behalf of the policyholder. He is able to achieve the maximum settlement under the policy, subject always to the adequacy of the sum insured and warranties and conditions being adhered to.

Preparation and negotiation are, therefore, the keys to a satisfactory claims settlement, which can only be achieved by dealing with a multitude of various claims.

The current climate makes competition inevitable among loss adjusters representing insurers. In demonstrating that they are better than their competitors, by way of providing suitable services they are able to obtain reductions in claims settlements to the satisfaction of insurers. They must minimise the loss.

Professional loss assessors will go for the very antithesis, namely to maximise for the policyholder what they are legally entitled to, having paid the premium, subject to the adequacy of sum insured. The difference between maximising and minimising a claim can be extremely significant. Here are a few examples of offers made by loss adjusters representing insurers and my company negotiating final settlements on behalf of clients (policyholders).

Fire at a restaurant with dual insurance
It is an accepted practice under insurance law, unless anything is contained to the contrary, that where two insurances cover the same risk, as here, the sums insured would be aggregated. The fire occurred around 6.30pm one evening and at midnight one of the insurers would have come off the cover. With one insurance policy in force, this would have resulted in under-insurance and the average clause applying thereby reducing the settlement.

This would also have affected the business interruption cover. The loss adjuster attempted to suggest that because one insurer was coming off cover some few hours after the incident, that both policies should be subject to a contribution condition. This would have restricted their liability to a rateable proportion of any loss if there was another policy in force at the time.

He wanted to calculate a contribution between insurers in such circumstances based upon independent liability. We argued this, not only with the loss adjuster but with the insurers and it took several weeks before insurers accepted our interpretation of the cover, resulting in our clients receiving an additional several thousand pounds of settlement.

Discontinuation of a business following a fire
A client for whom we acted following a fire at his shop premises, which had been fire-bombed, decided shortly after, not to re-open for business when the premises were made habitable, as he feared a re-occurrence.

The adjuster, when hearing of this possible decision, suggested that the basis for settlement of the contents claim of the shop such as stock in trade, fixtures and fittings should be scaled down as the insured was not going to replace these. We stated that this was not in accordance with policy conditions, the insured was entitled to be paid the value for replacement of stock regardless of whether re-instated or not, and indemnity value on fixtures and fittings.

We were successful in overcoming this obstacle and thereafter obtaining a satisfactory settlement. With regards to the business interruption claim, the adjuster quoted the condition under the policy, which states that if the business was discontinued or wound up, the policy becomes null and void. We pointed out that this condition was applicable to happenings prior to the fire, not subsequent. He had, however, reported to his principals that due to his decision not to re-open the premises, there would be no claim under the business interruption policy.

We had to make not only representations to the adjuster, but to the insurers, who had by then repudiated any claim. We stated that the insured could not have traded from the premises until such time as the building had been re-instated and fixtures and fittings replaced, together with stock. We were able to demonstrate to the insurers that this would have taken between seven to eight months.

We prepared a claim on the basis of loss of gross profit for seven months and persuaded the insurers to agree to this.

Another litigation victory
A severe fire occurred in the City of London following a break-in by thieves. The business was virtually gutted. The loss adjuster acting on behalf of the insurance company, informed us that their principals were repudiating the claim on the grounds of breach of policy warranty, namely that the alarm system had not been connected to a Central Station.

We strongly recommended the issuing of a writ upon the insurers, as it was our contention that the repudiation was unwarranted, taking all the information into consideration.

Prior to the case being brought to the High Court, we were able to agree with the appointed loss adjuster, quantum of the loss entirely without prejudice. After a two and a half day hearing, judgment was entered in favour of our client in the sum of almost £900,000 plus costs.

Loss adjusters wrongly interpret definition of gross policy
The issue was on the definition of gross profit. The insurer's policy defined the rate of gross profit as being "Revenue less the costs of stocks, raw materials or components purchased after making allowances for opening and closing stocks". In our calculation, we had quite correctly taken sub-contractors as being components purchased, where the loss adjusters had taken sub-contractors as being part of gross profit, and as they had stated "used the policy wording strictly in its definition of gross profit".

This caused a difference in gross profit percentage of 37.69% which created a massive under-insurance, and a substantial saving in sub-contractor charges. Increasing the gross profit percentage created the penalisation of under insurance, whereas the correct interpretation by us ensured an appropriate evaluation of the loss.

The loss adjuster went on to say that being conscious of the material difference this made to the overall settlement of the claim, he discussed the matter in detail with their insurers' representatives and sought their instructions before writing to us. We were able to convince them that the sub-contractors were in fact uninsured working expenses and following their further consultation with insurers, they accepted this fact. This resulted in a substantial increase in the settlement figure, from the loss adjusters offer of £27,853 to £52,735.

It is, therefore vital, for claimants to have an experienced professional loss assessor representing their interest in its entirety.