The collaboration of VANTEVO CLAIMS ADVISORS with the Insurer Adjuster in a major loss.

The Adjuster appointed by the Insurer is the image of itself at the time of the claim, which is “the moment of truth” in the insurance world. This must collaborate with the Insured’s Adjuster (VANTEVO) to normalize the productive risk situation as soon as possible and minimize the consequential losses caused by the claim, for which it must recommend that the Insurance company make “payments on account” to the Insured to face to the measures taken.

You must be proactive at all times and try to collaborate with the Insured and his Adjuster, the Insurance Broker and the Insurer in “resolving” the claim with agility, professionalism and common sense according to the conditions of the contracted Policy.

VANTEVO will be happy to prepare and document the claim properly and collaborate with our colleagues in closing claims with agility, ethics and professionalism, thus demonstrating that the policy has worked correctly and the Insured has received the corresponding indemnity according to it.

Importance of action, in fire accidents, of the Decontamination and Recovery of Machinery and Facilities companies.

In fire disasters, some assets are destroyed and must be replaced. Others, on the other hand, only suffer partial damages that can be recovered.

It also usually happens, in major fires, that the fire directly affects a part of the risk, and other parts are damaged by smoke, heat, water thrown by the Fire Brigade…

In this case, it is profitable to involve companies specialized in decontamination and recovery of both mechanical, electrical and electronic equipment. Fortunately, these companies, some of them are international, must intervene as soon as possible as the corrosion and oxidation processes advance day by day.

Also, in cases where consequential losses are significant due to the stoppage of key machines and facilities in the production process and which have replacement periods of several months, their intervention can be very profitable. On some occasions it is possible to temporarily recover damaged machines, which work for a few months until the new ones arrive, thus minimizing consequential losses.

What happens to the deductible when there is underinsurance in the Consequential Loss Policy?

Fortunately, this assumption of underinsurance occurs rarely in practice, because with the Automatic Increase clauses, which allow the regulation of the sum insured at the closing of the accounts for the year, there is usually no underinsurance.

In cases where this clause does not exist or the Insureds have not notified the company or its broker of updates, either up or down, of the amounts insured, and an underinsurance is detected, there are usually problems.

The mistake that many adjusters make is to apply first the underinsurance and then the deductible, when we at VANTEVO understand that, in those cases, the franchise must be applied first and then the underinsurance.

The reason is that, although some insurers do not share it, the underinsurance must also affect the deductible, that is, the part of the claim assumed by the Insured, otherwise it would be unfairly harmed and there could be cases in which indemnity is negative.

The maximum indemnity periods (MIP) are in many cases insufficient in BI / CL policies.

Unfortunately, many Insureds and Brokers try to lower the cost of the premium of BI / CL policies, reducing the maximum period of indemnity, which is in VANTEVO’s opinion a serious mistake.

Indeed, this policy, which must be a “tailored suit” (no two companies are the same and there should not be two policies the same) must be designed with a serious loss in mind. To do this, we must calculate how long it would take to normalize the risk production and commercial activity after a very serious loss. That should be the PMI to consider in the policy.

In this calculation, it is necessary to take into account the period of debris removal, the time to obtain permits and licenses, the delivery times of the fundamental machinery, the adjustment time of the new machinery… and this in many companies is closer to the 24 months than at 12 months.

Why do insurers require property damage to be covered for consequential loss coverage to work?

If the Insured does not have the economic capacity to repair the material damage, either due to not having a damage policy or because it is clearly insufficient due to a serious alleged underinsurance, the period of repair of the damage can be delayed for months and months and then all the consequential loss policies would exhaust your maximum indemnity period.

This would occur both in the case of English policies (Business Interruption) and the same with American policies (Gross Earnings), since it would be impossible to normalize the production of the risk affected by the claim due to lack of economic resources of the Insured.

It is even advisable that the insurer for material damage and consequential losses is the same, so that there is no interference in the adjustments of damages and losses and that work is done in order to give priority to the resumption of productive activity as soon as possible, to minimize the consequential losses that in industrial claims are usually more important than material damages.

What happens when a claim occurs that causes consequential losses during the warranty period of an insured machine or installation?

In these cases, it is highly probable that the material damages are assumed by the manufacturer of the machine or installation affected. But in the manufacturer’s warranty contracts it is usually specified that the manufacturer does not cover the consequential losses generated by the accident.

Since property damage is not covered by the policy, some Insurers have tried not to intervene in Consequential Loss coverage, claiming that property damage was not covered by it.

At VANTEVO we understand that this approach is wrong and we have always tried to convince the Insurers that there was coverage for consequential losses.

To avoid this type of discussion, it should be specified in the policy that, in these circumstances, a claim within the warranty period of the insured machine or installation will be indemnified for consequential losses caused by the claim, as long as the claim is contracted consequential loss coverage.

Lessons from the Coronavirus

Of this pandemic, we already commented the other day, about the importance of contingency plans.

Today we want to draw attention to the need for Western countries, like ours, to be self-sufficient in the production of basic and strategic equipment such as medical supplies for a country. It is not only necessary to take into account the economic benefit in these issues of strategic importance for a country such as the health and lives of its citizens.

On the other hand, it is necessary that the States and the insurance industry get involved in the coverage and mutualisation of the large losses that companies can suffer due to a confinement such as the one that occurred on this occasion.

These are reflections that we make from Vantevo to alleviate and distribute the costs generated by future pandemics.

Maintenance contracts and machinery breakdown coverage.

We have heard many times that if an important machine has a maintenance contract, it no longer needs to be insured for Machinery Breakdown. The foregoing is a gross error since a maintenance contract will never cover claims due to negligence of personnel (which is one of the main causes of claims). Nor will it be responsible for the consequential losses caused by a production stoppage as a result of a breakdown.

These two very important cases can be covered with a Machinery Breakdown policy and its corresponding coverage of consequential losses due to Machinery Breakdown.

That is why Maintenance contracts and Machinery Breakdown policies are complementary and never substitute for one another. Of course, it should be borne in mind that a good maintenance contract can and should reduce the premium for the Machinery Breakdown policy.

The study of the cause of Machinery Breakdowns.

We are all well aware that ascertaining the cause of a loss event is essential in order to clarify the cover for the claim, determine liability for the same and to take measures to prevent it from happening again.

In the case of serious fire losses, sometimes given the degree of destruction caused by the fire, it is not easy to pinpoint the origin of the same, despite contracting experts in root cause investigations.

In cases of Machinery Breakdown claims, the study of their cause is less complicated, but nonetheless often requires the intervention of metallurgical or electrical laboratories, depending upon the presumed origin of the loss event.

It is only by means of a metallurgical analysis that you can verify whether the fracture process of a blade or metal part has been a slow and gradual one or sudden and unforeseeable,  besides being accidental.  In the first case, the loss would not be covered whilst in the second, it would be.  Again we would need the assistance of a metallurgical laboratory to ascertain whether any corrosion or erosion was slow and gradual or accidental and fast, and therefore possibly covered in this latter case.

At VANTEVO CLAIMS ADVISORS, we tend to use the laboratories of Engineering Schools, since in the event of any dispute, the courts usually positively weigh the reports signed by professors, since they assume they have the knowledge and independence to issue their opinion.

There are not normally any problems with the conclusions reached in the laboratory reports, since these are usually clear and conclusive, and their conclusions are objective and well documented, and accordingly can be accepted by all the parties involved in the claim.

At VANTEVO CLAIMS ADVISORS, we usually ask that, in addition to ascertaining the “root cause” of the loss event, they suggest measures to avoid similar claims in the future and their recommendations normally are very interesting.

 

 

Gas explosions: Importance of maintenance.

Gas explosions are very conspicuous and have great media coverage, but they are very rare considering the large number of gas installations in Western countries.

What happened a few days ago in Madrid, a gas explosion that caused the death of several people and destroyed several floors of a building was due, being a piped gas installation, to a significant gas leak that formed a pocket that reached a concentration to explode at a given time when some phenomenon occurs that caused the explosion of it. What is striking is that due to the smell, the gas leakage had not been detected before and a large pocket was formed. Also striking is the several hours it took for the firefighters to cut off the gas supply in the area in the moments after the explosion.

It was clear that they were not butane cylinders, since they do not produce such damage unless several are deliberately concentrated as has happened with suicide attempts that have sometimes caused several deaths.

Good maintenance of the facilities is essential. The regulation of once every 5 years in the case of gas cylinders and every 2 years in gas boilers, seems insufficient to us and maintenance contracts should be made for annual reviews, since it is necessary to review elements that deteriorate over time such as valves , regulators, flexible connections …

These maintenance contracts should be signed with companies of recognized solvency and experience that have specialized personnel.