Insurance claims: what is the delay?
When things go wrong in a rental, you want everything sorted out quickly. But while there are steps you can take to make the claims process easier, there are factors at play beyond your control or that of the homeowner’s insurer that could see these claims blocked.
When a rental is damaged, you and your client want it repaired as quickly as possible. And the insurer too.
Like you, the insurer knows that the sooner the rental is fixed, the better. This reduces the risk of additional consequential damages, allows the property to generate income again and generally reduces the amount of a claim – delays can lead to cost explosions.
This means that insurers aim to settle claims as quickly as possible.
Despite the best intentions, however, these plans can be derailed. And lately, there have been factors beyond anyone’s control that have caused delays and disruptions in all sorts of regular business activities, including the settlement of insurance claims.
Like many industries, insurance is affected by Australia’s historically low unemployment rate, the impact of the COVID-19 pandemic and some major insurance events thanks to Mother Nature.
As a result, there may be fewer adjusters or experienced claims specialists handling an unusually high number of claims.
Construction and trades have felt labor shortages even more acutely. Trying to get someone with a tool belt on hand can seem a bit like mission impossible these days.
This means that it is difficult for insurers to obtain the services of an adjuster or builder/craftsman to assess the cause of a claim and provide a cost to repair that damage.
Without the input of these professionals, it is difficult to settle a claim. The problem of the lack of trades also means that repairs take much longer.
The problem of repairs was compounded by a shortage of building materials. COVID-19 and other global events such as the war in Ukraine have led to global supply chain disruptions, making raw and finished materials more difficult to obtain quickly or at all, and more expensive.
Locally, border closures during Covid and flooding of transport routes have also had lasting impacts. This means that repairs are delayed because the necessary materials are not available.
In some cases, it is not only building materials that are missing, but also other goods, so replacing lost content, and especially that from abroad, can also take longer.
Already limited labor and material supply issues have been further impacted by the recent series of extreme weather events.
When large-scale events like the East Coast floods occur, the demand for insurance and construction services increases dramatically.
This makes it even more difficult to access an adjuster or trades, resulting in longer repair and replacement times.
It’s not just those caught up in the weather event that are affected. When the Insurance Council of Australia declares a catastrophe, insurers are forced to prioritize these claims, often inevitably extending settlement deadlines for other claims related to non-catastrophic events.
Although insurance claims can take longer to settle due to local and global events, there are things you can do to speed up the process – starting with understanding your client’s homeowner’s insurance policy and what you will need to submit for the claim.
When things don’t go as planned at the rental and your landlord client needs to make an insurance claim, here are our top tips to help streamline the process:
- Contact the homeowner’s insurer as soon as you know a claim may need to be made.
The insurer will be able to advise on the process – they will let you know if the claim is likely to be covered by the policy (you might be surprised how often claims are submitted for things that aren’t all simply not insured events) and what you will need to provide to support the claim.
They can also notify you of any overpayments and other matters that may affect whether or not a claim is made.
- Understand the obligations of the insured, such as the need to act to prevent further loss.
This means you may need to set up a tarp to cover a damaged roof, mount a damaged window or door, move undamaged items out of harm’s way, or arrange for emergency repairs.
- Gather the evidence. It is the responsibility of the policyholder to prove that a loss has occurred.
This means they must provide proof that they have suffered financial loss as a result of an insured event.
Document any damage with photos and videos, make a list of damaged items, and ensure that damaged items are not discarded unless they pose a health risk (e.g. soaked carpets ). Even then, keep a sample or other evidence to show the adjuster.
- Gather the paperwork. You will need to submit a number of documents to support the claim, depending on the type of loss.
For example, a causality report, receipts for emergency work, quotes for repairs, rental record or inspection reports. The insurer will indicate what is required.
- Submit the application, including all supporting documents. If the documents are not provided when the application is first submitted, they will be requested later – and this only prolongs the process.
Ultimately, having the right things on hand will speed up the process – and the sooner the insurer can assess the claim, the sooner it can be settled.