Investigating Claims

A claims investigation plays a pivotal role in the legal defense of a claim. First, it aids in collecting and preserving critical evidence and facts that either prove or disprove the allegations of the claim. A thorough investigation can uncover potential inconsistencies, exaggerations, or even fraudulent activities that might significantly influence legal proceedings. Furthermore, it helps identify other potential involved parties, further defining the level of obligation or liability attached to each. This process ensures that accurate information is presented to legal counsel, enabling them to build a solid defense strategy. Early investigation keeps defense costs in check by improving negotiation leverage and speeding up the settlement process. The collected data also assists in identifying opportunities for viable risk transfer. Overall, the claims investigation forms an integral part of the claims resolution lifecycle, directly affecting claim reserves, litigation strategies, cost control, and indemnity payments.

Impact of Investigation

A meticulously conducted claims investigation plays a key role in determining the duration, direction, and resolution of an insurance claim. Effective fact finding serves multiple objectives: It ascertains liability, assesses extent of damage, and verifies the claim’s legitimacy; it equips the insured, the insurer, and defense counsel with the vital data required for a fair claim resolution and helps direct potential litigation in the future; and it can unearth additional potential parties and fraudulent or overstated claims, mitigating unnecessary financial payout.

Conversely, the lack of a thorough investigation can have serious ramifications. It may lead to lengthy litigation, unjust payouts, increased premiums, and legal complications. Investigating improperly can lead to missing critical facts, resulting in payment on exaggerated, inflated, or fraudulent claims. It may also miss opportunities for subrogation or risk transfer. Such a shortfall inhibits strategic decision-making, escalates claim expenses, increases potential for litigation, and potentially damages the insureds or insurer’s reputation. Thus, a proper claims investigation is vital for fair, efficient, and cost-effective claims and litigation management.

Conducting a Proper Investigation

First and foremost, do not make a bad situation worse. Make sure the injured worker gets the appropriate treatment. Once clearance is obtained and the emergency is abated, the investigation scene should be vacated, protected, and photographed. Barricade and, if possible, assign an employee to protect the area to avoid any manipulation of the scene. All evidence should be taken out of service, tagged, and preserved. Photograph and make written records of the incident events.

If possible, obtain signed, audio, or video statements from witnesses. Stories often change over time as memories fade.

Claims Investigation Options

There are four main types of claim investigations: field investigation, desk investigation, third-party investigation, and attorney-led third-party investigation, each offering unique benefits and potential disadvantages.

Field investigation

Advantages: Field investigations are cost-effective and can be completed immediately. Also, job site employees may be more comfortable with general contractors, or construction manager’s staff, who are already familiar to them.

Disadvantages: Field investigations may be the most inconsistent option, potentially overlooking critical information, and there could be bias due to connections with the workplace or fear of potential reprisals. Additionally, those conducting the investigation may lack skills and training to complete proper data collection and interviews. The biggest disadvantage of a field investigation is it may not be privileged.

Desk investigation

Advantages: This type of investigation is cost-effective and can be conducted promptly. It involves scrutinizing documents, reports, and other relevant records, which provides substantial information on a variety of claims, especially straightforward ones. Desk investigations also continue to be conducted even after the construction site has resumed its regular operations.

Disadvantages: Desk investigations are limited to the available documents and do not provide an opportunity for an onsite inspection or face-to-face interviews, making it hard to assess all facets of more complex or contentious claims.

Third-party investigation

Advantages: By utilizing third-party services, businesses can benefit from specialized skillsets. Their experience in handling a wide range of investigations often equips them with the resources to execute a thorough inquiry. Third-party investigators are helpful in collecting detailed data and conducting comprehensive interviews. Comfortable with asking hard-hitting questions, they bring an unbiased perspective and can often manage experienced witnesses effectively. Ensuring consistent quality in reporting and photography, they contribute to maintaining a high standard across documentation. Furthermore, by enlisting a third party, there might be an increased likelihood to preserve legal privileges due to their position as independent entities outside the company involved.

Disadvantages: Trusting a third-party investigation can pose issues of quality control and may lead to communication challenges. It can also be costly and could lead to less control over the timeline.

Attorney-led third-party investigation

Advantages: In addition to the benefits of a third-party investigation, when an attorney leads an investigation, they can use their expertise in legal matters to focus on points that could become significant in creating an affirmative defense. They may also ensure that the investigation process complies with the law and preserves any potential for legal privilege.

Disadvantages: This type of investigation might be the costliest and could result in less control over the timeline.

Choosing the Best Option

The decision concerning which type of claims investigation to undertake usually requires evaluation on a case-by-case basis. Instances involving substantial property damage or serious injuries naturally warrant a more comprehensive investigation. High-profile incidents or those that attract media attention typically require thorough due diligence. Where the incident raises suspicion or is not reported promptly, opting for a full investigation may be a wise decision, but not possible given the time that passed. Hence, the context, severity, and characteristics of each individual case play a significant role in shaping the investigation approach.

Never undervalue the significance of a proper post-accident investigation, even in cases that may initially seem minor. Adhere to the correct incident investigation procedures and assure comprehensive completion. To successfully mitigate claim exposure, it is imperative to conduct an exhaustive investigation immediately after an accident, as it provides an excellent opportunity for earlier settlement or resolution.

Charter Partners is here as a training resource for you and your staff on how to implement the best program that suits your company.