What Happens When A Claim Goes Bad

By Andy McGinty, LIPCA Insurance

I get asked all the time on how we settle claims one way and on others a totally different manner.  There are various factors such as location of the claim, parties involved, who our insured might be with their experience, etc.  With that said one of the most important reasons we settle claims a certain way is what happened before we received the loss notice.

A lot depends on the claimants’ “attitude” when we first start dealing with them after the claim hits our office. The bottom line is how did our insured treat their customer when the problem was first reported to them.  Over the last 25+ years in handling pest and lawn claims I can assure you we have seen a lot of ways of how NOT to treat a customer when a potential claim occurs.

What needs to be remembered is when a customer contacts your office in the back of their mind they need to know why the problem occurred, but most feel they have been wronged in some way.  The issue needs to be investigated quickly, professionally, and thoroughly explained even if you must repeat yourself multiple times. Yes, it can be aggravating but please get over it.  You are always the professional and need to act like it.

One of the biggest mistakes is being defensive right from the start.  “I hear what you are saying but we are not responsible for your damages.” “There is no way we hit that pipe during your termite treatment.” “There were no bed bugs found during our last inspection.” “I placed these rodent bait stations where no pet could get to them.”  These examples, and trust me there are many more, are all said before the PMP even does the smallest amount of investigation.  I am not sure how these comments are made without a little due diligence on your part.

Oh, please do me a favor, if a customer calls with a complaint or claim, please do not tell them you will have to charge them for an additional visit or inspection.  Yea that went over well with the future plaintiff.  As expected, they filed suit and the extra charge issue was one of the allegations made against the insured. Can you imagine the plaintiff attorney looking at a jury with that gem of information?  Depending on the regulators we have gotten to know over the years what they might say?  You could bet it would not go over too well in some states.

When the claim hits our office and our insured has said or told the customer some of the examples stated above, we start “behind the eight ball”.  Instead of getting right to the heart of the claim and complaint we must get them over their defensive and combative positions. This, of course, is if they have not already gone to an attorney which takes the claim to another level most times. 

Most attorneys have no idea how to pursue say a termite, WDIR or inhalation claim.  But as with many legal scholars, they think they are smarter than everyone involved.  Again, after many years adjudicating these matters, they are not. Therefore, creates the problem.

The PMP has incensed the customer to the extent they run to an attorney and when that happens and suit is filed, the cost of the claim goes up automatically.  As stated above, most attorneys are not skilled with pest claims and you have to legally “beat them over the head”.  We must obtain experts, do discovery and the like before they realize their claim is weak or has no credence.  So, after usually spending 5 figures $$$$$ on the defense we get them back to what the original claim should have cost or sometimes even less. Either way you still have a large claim against your loss history and can affect your renewal premium. Book it.

The larger companies need to really focus more on this issue.  A constant person dealing with potential claims is crucial. Those answering the phone at the office, techs in the field and the like need to know what to and what not to say. If there is no consistency from all personnel in your office then the credibility factor comes into play.  Once that is lost with the customer, then the handling of the claim is taken to another level. This is an excellent training subject and give please give examples during these sessions. Best ways to handle these complaints are imperative.

Could these subsequent problems have been prevented by handling this matter a little more professionally and less defensively from the start? I can pretty much state that the answer is yes, most times. Of course, there are customers, claimants and plaintiffs that will never listen to reason. They think they know more being educated by the internet, their claim is worth more, they think they have won the lottery, etc.  These are understandable and there is little you can do about that. That is what we are prepared for and ready to handle.

Oh, one more favor.  Please and I sincerely request that you never tell your customers they need “professional psychiatric help”.  Yes, I can truly see that as being an example of how a claim can go bad.  Good luck.   

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Andy McGinty is the CEO of LIPCA Insurance National Pest/Lawn Industry Owned Program
800-893-9887 Ext 101  andy.mcginty@lipca.com

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