How switching appliances can shorten claims cycles

Supply chain problems aren’t going away any time soon for insurance adjusters.

Home improvement retailers and warehouses have been plagued by empty shelves since the first year of the COVID-19 pandemic. And goods scarcities for everything from lumber to La-Z-Boys have driven cost increases that make home insurance claims settlements more expensive.

“It’s going to take a while, in terms of the supply chain getting back to what the demand is,” said Janak Lally, assistant vice president at ClaimsPro – BC Lower Mainland & Interior. “You’re waiting on products for a long time.”

Lately, that’s been particularly true for home appliances – which makes adjusters’ jobs harder if they’re trying to control costs while getting clients’ lives back to normal following NatCats or other events where homeowners experience contents losses.

Difficulty in sourcing identical appliances has led to delays in home restorations, said Lally, who is also president of the Canadian Independent Adjusters’ Association. This in turn has driven up costs for housing clients in hotels or other lodgings while waiting for their homes to be habitable.

In response, adjusters have gotten creative by suggesting clients consider alternative appliance makes or models that are at least comparable. And the strategy’s had good results.

“Some people are reasonable and saying, ‘Okay, I’ll go with this different brand,’” he noted.

Once a client agrees, adjusters often must approach insurers to discuss what’s reasonable in terms of a unit “being of like kind and quality” or even upgrading units to get claims closed.

“Some insurers have been okay with saying, ‘You know what, we can’t get that exact same model. The model below is not there [to purchase], so we’re okay to get them a higher model and we’ll pay for it – if the overall cost of claim can be mitigated’” Lally said.

“There’s maybe a little more flexibility on claims handling.”

In part, high claims volumes triggered by the recent spate of NatCats has been responsible for this easing of processes and the granting of a bit more authority to adjusters.

“It depends on the insurer,” Lally said. “Some are very good at saying ‘Let’s just mitigate the overall cost,’ and others are still saying, ‘We’re sticking to our process and we’re only going to indemnify based on the true loss itself.’”

The latter stance can lead to losses shifting around, particularly since inflation continues to push up costs for materials needed in all aspects of home restoration.

That means adjusters must “focus on telling the story of the loss” and show insurers it makes financial sense to pay for something that’s not explicitly covered in exchange for getting clients to agree to move back into their homes by a certain time.

Doing that can reduce long-term costs by getting files closed.

“Sometimes you have to think outside the box,” said Lally. “So, a more expensive washing machine means a shorter lodging [term and lower] bill.”


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