This document provides guidance on managing insurance claims and losses. It outlines important organizational steps like designating responsible parties and understanding existing coverage. When responding to claims or losses, the document advises putting together a team, promptly reporting incidents, cooperating fully with insurers, and challenging any denial of coverage. It also distinguishes between liability and property insurance, and notes specific considerations and policies for each type of claim. The overall message is to be well-organized, know your policies inside and out, and seek advice from experts to help avoid denials and maximize coverage.

1. Managing Claims and Losses –
Protect Your Insurance Coverage and Your
Premiums
Ariel DeJong
May 30, 2007

2. Organization & Due Diligence
• Who is responsible for insurance in coverage in your
company?
• Risk manager or risk management department
• Broker – good relationship important
• Counsel (internal or external) – liaison critical
• Access to coverage expertise essential
• Understand the coverage you have
• Read your policies and know what they say
• Know what policies you have (CGL, Property, BI, Builder’s Risk,
D&O, E&O, project specific)
• Policies others you contract with have covenanted to provide –
“additional insured”
• Ensure your and others covenants to insure are being
complied with

3. Organization & Due Diligence
• Keep all your policies including those others are obliged to
place
• Don’t throw away old policies (especially occurrence based)
• Includes application, declarations page, policy wording, all
endorsements
• Don’t rely on your broker to keep copies
• Manage, retain and store (30 years)
• Make informed decisions about coverage
• Avoid overlapping coverage
• Avoid gaps in coverage (claims made, exclusions)

4. Responding to a major claim or loss - General
• Put together a team
• Business drivers (marketing, production, customers, relationships)
• Risk manager
• In-house counsel
• Insurance advisors (legal and other)
• Experts
• Why?
• To understand potential coverage issues before claim or loss
presented or denied (statements to adjusters)
• To avoid denials by way claims and losses presented
• To ensure compliance with obligations under policies
• To manage information flow
• To ensure coverage implications of decisions made are considered

5. Responding to Claims (Liability – Third Party)
• Reporting duty (read your policy - don’t assume)
• Occurrence based policies
• Report claims immediately before you settle or defend
• Report occurrences
• Report to all insurers under all possible policies
• Delay – relief - policyholder good faith and insurer prejudice
• Claims made policies
• Report circumstances which may give rise to a claim
• Report claims made during the policy period
• Delay – can result in no coverage – no relief
• Purchase extending reporting period coverage
• Tender claims to insurer where insurer has duty to defend

6. Responding to Claims (Liability – Third Party)
• Duties of policyholder
• Co-operate in defence and investigation of a claim
• Access to documents
• Protect right of subrogation
• Not to admit liability
• Not to make voluntary payments or settlements without insurer’s
consent except at own expense
• Non-waiver agreements
• Don’t sign them without seeking advice – no obligation
• Respond to them – invite specifics regarding coverage concerns
• Reservation of rights – unilateral
• Conflicts - independent counsel- can waive if don’t respond

7. Responding to Claims (Liability – Third Party)
• Duty of insurer to defend and indemnify
• Duty to defend is broader
• Real value in many liability policies
• Not always a duty to defend but obligation to pay for defence
• Dealing with denials of coverage
• Don’t take no for an answer
• Get it in writing
• Obtain advice on coverage position
• Respond to denials – ask for reasons
• Challenge denial – meeting, lawyer’s letter, arbitrate, litigate
• Be wary of limitation periods – can be one year from unequivocal
denial of coverage despite what policy says (Demers case)
• Insurance Act amendment being considered - 2 year limitation

8. Responding to Claims (Liability – Third Party)
• Allocation of defence costs between covered and
uncovered claims
• Insurer required to pay for all defence costs except those “solely
and undeniably” referable to an uncovered claim
• Onus on insurer
• Costs which benefit both are payable by insurer
• Allocation before judgment or settlement usually premature
• Don’t agree to an allocation up front
• Some policies have a specific allocation clause (80/20)
• Get advice

9. Responding to Losses (Property – First Party)
• Report to insurer as soon as loss occurs
• One person should be responsible
• Failure to comply can result in no coverage
• Understand potential coverage issues before you meet with
adjuster – get advice
• Consider retaining consultants and experts
• Faulty design/workmanship/material exclusion – resultant damage
• Soft costs/business interruption/delayed opening
• Track costs and maintain records of expenses based on coverage
• Sue and labour
• Purpose: to require the policyholder to take reasonable steps to
prevent imminent loss or damage to insured property and to
require the insurer to pay for those costs

10. Responding to Losses (Property – First Party)
• Proof of Loss
• Interim or final
• Insurance Act sets out requirements (s. 6 of s.126)
• Insurer required to send form
• Get experts involved if complicated (sometimes these costs are
covered)
• Any fraud or wilfully false statement vitiates claim
• Get advice on potential coverage issues before you file
• Usually sworn – be careful and be accurate
• Loss usually payable within 60 days – can’t sue till then

11. Responding to Losses (Property – First Party)
• Dealing with denials of coverage
• See above
• What are the issues in dispute (amount of loss or coverage)
• Appraisers or experts needed?

12. Lessons Learned
• After each loss or claim evaluate outcome
• Can you avoid unfavourable outcomes in future
• Coverage gaps or overlap
• Internal policies and procedures – how can we respond
better