The moments immediately following an auto accident are distressing and confusing no matter what the circumstances. This critical timeframe is when the clock starts on your claim reporting. How quickly you report a claim determines how that claim will play out in some surprising ways in terms of the ultimate cost, stress to your business and, perhaps most importantly, the way the accident reflects on your business’ reputation.
What is claim reporting lag and why does it matter?
Claim reporting lag is the time between the actual occurrence of loss and when it gets reported to your insurance carrier. Numerous circumstances can extend this time period, but claims adjusters repeatedly witness the correlation between long lag times and claim outcomes that could have been better if only the adjuster had been involved sooner.
Most discussions of the negative effects of extensive claim reporting lags pertain to workers’ compensation insurance, but auto liability is just as susceptible, if not more so. With an auto liability claim, there is a third party involved and you have less control over what happened just before, during and after the accident as compared to an incident inside your facility involving one of your employees.
Also, in auto liability cases you may be acting under the false assumption that there is no liability if the accident clearly wasn’t your employee’s fault. But what you think you’re liable for doesn’t take away the other party’s right to pursue a claim. The physical damage to the vehicles involved should also be a concern as repair costs continue to increase exponentially, due to rising materials costs and labor charges.
Five consequences of longer claim reporting lags
With each hour, day or week that passes before you report an auto incident to your carrier, your odds of a less-than-desirable outcome increase. Consider some of the possible negative consequences of delayed claim reporting:
- Increased chance that the third party will hire an attorney and file suit. Evidence shows that the longer it takes to respond to the third parties involved, the more likely they’ll take action against your company. In today’s consumer-driven world, people expect a prompt response to their concerns, and any delay puts you at a disadvantage right from the start.
- Higher property damage costs. Longer lag times can mean higher expenses for repair costs, car rentals, down time, storage costs and other expenses. Additional damage can occur if a vehicle is exposed to the elements for an extended period of time.
- More of your company’s time spent handling the logistics of post-incident tasks. A professional claim handler can remove the burden of the many administrative details after an incident and has access to resources you may not have, such as specialist repair and recovery services.
- Impeded ability to get the best possible result. A claims adjuster can more accurately assess your liability immediately after the incident occurs. Plus, if there is fraud involved by the third party, there will be less chance of detecting it as time passes.
- Increased risk of damage to your company’s brand and reputation. Your reputation could suffer if the third party feels mistreated and takes to social media to air his or her complaints. Injured people want to know that someone cares, and an experienced claim adjuster knows how to act on your behalf to respond compassionately and professionally.
Some ways you can reduce claim reporting lag time
The sooner an experienced claim handler gets involved, the smoother the claim will likely go for everyone involved in the incident and the better the chances of a positive outcome. Here are some tips for reducing lag time:
- Assess your internal reporting procedures for auto incidents. A lengthy internal “chain of command” slows down reporting to your broker and insurer.
- Even if your employee is not at fault in the incident, report it to your broker or carrier immediately.
- Discourage your employees from attempting to resolve the claim directly with the third party or that person’s insurance company.
- Include incident reporting as part of your fleet safety training program. Make sure employees know to report regardless of fault.
- Never assume a claim will “just go away.”
The bottom line is trust your broker, insurer and your claims adjuster to do what’s right, including thoroughly investigating the claim and paying what’s fairly owed. Claims adjusters have years of experience handling these types of incidents and you’ll benefit from allowing them to apply their investigative, legal and medical expertise as quickly as possible.
Click here for more tips on reporting claims.