Claims preparation costs

Introduction

Most specialised buildings cover insurance policies will include a benefit for ‘Claims Preparation Costs’. This cover is over and above the actual building damage repair costs. The policy schedule will then state the benefit limit of indemnity (cover amount available)

When does this apply?

In the event of a larger and more complex building damage claim, it is not uncommon for the need to appoint further professional contractors to assist in clarifying actual damages repair costs (agreed claim quantum). These are usually independent contractors, being the likes of Loss Adjusters/Assessors, Structural Engineers, Quantity Surveyors, Civil Engineers, Geotechnical Engineers, etc. These professionals charge a fee for giving guidance and advice, by way of written reporting.

These appointments can only be made with the consent of the insurer, or by the insurer themselves, in the process of determining and substantiating/validating any claim amount under consideration.

It is expressly stated in the policy contract wordings that these costs must be ‘reasonable’, so, by implication, then, the insurer may deny professional fees that could be deemed ‘excessive’ and/or ‘unreasonable’.

Conclusion

Insured property owner/s should not expect that costs incurred (contracted by the property owner) in preparation of the claim, before first receiving the insurer’s formal consent, will be covered. The insurer will not entertain its costs incurred for any personal time, travel or expense overheads incurred.