Why resolving claims disputes is about more than numbers

Want to increase the likelihood of a construction project insurance claim being accepted?

Take the time to validate each aspect of that claim. The upfront work will make it easier for any umpires, mediators, consultants or lawyers brought in to resolve the matter, and will ultimately save parties to the disagreement time and money.

Even if your claim is rejected, the pre-work will more likely lead to an equitable settlement that’s close to the amount being claimed.

Parties to a construction project are contractually required to carry insurance. So, if something goes wrong, in addition to facing the scrutiny of lawyers and mediators, parties to a claim may end up answering the queries of adjusters.

That means if the numbers don’t tally, parties may not get paid.

Most disputed claims involve costs. And when parties disagree on the costs, claims can be rejected or partially disputed.

It’s easy to think that just adding up the numbers and putting them in front of your counterparty is all that’s needed to get your claim accepted. But submitting a few claims this way will show it’s not just about knowing your numbers.

What if you can’t back up your numbers? What if there are rates that weren’t in the contract? Or what if you need to work out how long a specific activity took, but there is no baseline from which to work?

In these examples, one party or the other is required to make assumptions. For rates, quotes can be obtained or extrapolated from similar items; for project durations, similar recent projects or industry standards can be used as a baseline for estimates. But any sources you use need to be reasonable under the circumstances.

Dispute resolution experts usually handle any disagreements that arise. That’s good because their involvement increases the probability of reaching a settlement without having to resort to lawsuits.

Another way to avoid litigation is for an expert to provide facts, and document them clearly.

That’s not easy. If it were, then disputed claims simply wouldn’t happen.

But, with practice, you can improve your ability to communicate. These six steps can help you do that:

After you lay out the facts in a document, re-read what you’ve written with an eye toward challenging your logic and conclusions.
Check to see if you’ve made any assumptions. If you have, state them clearly.
Ask yourself if your assumptions are reasonable to others.
Make sure you can back up your numbers.
Show where sources for various facts can be found without having to go to other documents.
Have someone review the document before submitting it.

When you re-read your document, if any passages give you pause, stop, double check and consider re-writing unclear paragraphs. Validate your assumptions and ensure any numbers can be easily verified.

If someone who knows nothing about the claim can read what you’ve written, understand the logic, and see where the numbers came from, then you’ve produced a good claim that has a higher probability of being received positively and accepted – including by insurance adjusters.

If your claim is rejected, make sure you fully understand why. Ask for clarifications until you fully comprehend. If a counterparty can’t provide reasons, then you’ll be able to assert their position is unreasonable. That’s your cue to point out that many disputed claims end up in front of third-party intermediaries – all of whom will require explanations.

Your ability to analyze and prepare claims will improve with time. Having the facts at your fingertips will help you communicate effectively and persuasively.

Derek Sayers is managing director & practice lead for construction claims at Haag Canada. This article is excerpted from on that appeared in the April edition of Canadian Underwriter. Feature image by iStock.com/skynesher