To report a loss or not report a loss. That is the question.
We are often asked by clients if they should report a property or boiler and machinery loss even though they think the cost of repair is below the insurance deductible.
Some of our clients are fearful that if they report a claim that their insurance premiums will go up, or worse, they may be non-renewed the next year.
We understand both sides of this question, but usually advise our clients to at least notify the insurance company of what happened at the plant. It lets the insurance company know that you had a problem and are going to take care of it on your own. This starts a paper trail that keeps all sides informed. The insurance company may ask for more details and even offer to send a loss control officer to your location to help you get operational. Insurance companies want to everything they can to minimize the risk of a loss.
Remember, Insurance companies are in the business of maximizing profits and minimizing loss payouts. What may look like an inexpensive fix could drag out to several months to repair due to availability of repair parts or backlog of vendors to rebuild parts. (Think transformers.) This could trigger the insurance company to start paying business interruption until your plant is back on line or back to full production. The insurance company will always do whatever they can to get your plant back on line as soon as possible. It is a win-win situation. They pay less for a loss and you get back on line.
Failure to timely report a loss may result in denial of coverage. Keep the lines of communication going to prevent future headaches.
When in doubt, always contact your insurance agent to get guidance and err on the side of open communication.