Some insureds are taking matters into their own hands when it comes to a potential claims situation. Consider the following real scenario: 

A plumbing subcontractor was negligent in their piping work, causing significant damage to the building. They immediately realized the almost $90,000 mistake. When the general contractor came to them to discuss the owner’s disapproval with their negligence, the plumbing subcontractor’s priority was to maintain their good business relationship and reputation with both the owner and general contractor. Together, the plumbing subcontractor and general contractor were able to resolve the issue for only $60,000. The job was finished according to schedule and no additional losses were incurred. When the plumbing subcontractor subsequently claimed the $60,000 loss against their general liability policy, it was denied. The carrier said they had no prior knowledge of the loss and considered it a voluntary settlement: a common general liability policy exclusion.

Voluntary settlements or payments, in which a company is resolving potential claims themselves and then is subsequently going to their insurance carrier for reimbursement, are becoming more common across many industries. 

Very often contractors and subcontractors have an opportunity to leverage their professional partnerships and relationships to resolve a claim in a more expeditious manner and for far less cost than the insurance carrier might be able to. Doing so is more than just convenient; it often means the difference between preserving a working business relationship and losing one. 

Regardless of who your insurance carrier is, it is highly recommended that you first advise your insurance carrier of the potential voluntary settlement loss and gain their approval first, in writing . When seriously considering a voluntary settlement, take the following steps: 

  1. Report the issue ASAP. The sooner your insurance carrier knows of a potential claim regarding a voluntary settlement, the greater the chance your insurer may agree to provide either partial or full reimbursement.  
  2. Work with your HUB broker. Just like the long-standing, working relationship you have with your vendors or general contractors, HUB has a similar rapport with your insurance carrier. This relationship enables your HUB advisor to advocate on your behalf before you initiate in a voluntary settlement.

Reach out to your HUB advisor today to establish parameters should you desire to engage in a potential voluntary settlements or payment down the road.