Claims preparation coverage….

How a ‘minor’ coverage endorsement can prevent a policyholder from incurring significant costs in developing a claim, presenting the claim to the insurer, gathering information requested by the insurer in response to the claim, and in negotiating the claim.

This frequently requires retention of various consultants, including construction consultants for building damage, accountants for time element coverages, and specialists when the claim involves complex or unique equipment or industry-specific requirements such as clean areas for computer or pharmaceutical manufacturers. Policyholders frequently hire public adjusters to oversee the claim preparation, presentation, and negotiation process, and the public adjusters frequently hire the necessary consultants. In other situations, a sophisticated policyholder will manage the claim process itself and directly retain consultants. The claim process is frequently referred to in the industry as the "adjustment" process, with both policyholder and insurer working toward an "amicable adjustment" of the claim.

Sophisticated policyholders frequently have coverage for claim preparation expenses in their policies, although most insurers specifically exclude public adjuster fees from that coverage. In a complicated claim, this additional coverage can be worth tens of thousands of dollars. One typical provision reads as follows.

This section covers the reasonable expenses incurred by the Assured for professional services such as auditors, accountants, architects, and engineers, except the Assured's own employees or public adjusters, which are required to present the loss which is covered by this Section.

As is typical in most policy provisions which provide for the insurer to pay claim preparation expense, public adjuster fees are specifically excluded.