4.11.4 How should I deal with a payment from an insurer for an insurance claim and / or an insurance excess?
- Let's start by taking an example - Say there is a leak from one flat to another and the cost of decorating to repair the damage is £1,000. Say there is an excess of £200 and the insurer agrees to pay the balance of £800. You would enter the decorator's invoice as a normal supplier invoice (i.e. for £1,000) and record payment of the invoice as normal.
- In terms of how the insurance claim is handled, there are two scenarios - Either the Service Charge fund pays for the excess or the excess is paid by a leaseholder.
- If the service charge fund pays the excess - When the insurer pays £800 this would be loaded as a Credit using the Supplier Invoice screen with the Insurer as the Supplier. You enter the invoice as Invoice Type ‘Credit Note’. The ‘Payment details’ would reflect the funds received from the insurer. In this scenario the original supplier invoice and the Insurance re-imbursement would be categorised against the relevant budget service category (e.g. 'repairs and maintenance', or 'insurance excess' if one has been set-up). The net difference (i.e. £200 in this example) would therefore be reported against the correct budget service.
- If the service charge excess is paid by a leaseholder - The insurers payment of £800 would be treated as above. You should issue an ad-hoc 'Administrative Service Charge' demand to the leaseholder, and record the receipt of £200 against this demand. In this scenario the original supplier invoice for £1,000 and the Insurance re-imbursement of £800 should be categorised against the budget service category 'Recoverable costs'. (This treatment is the same as the treatment of other 'Recoverable costs' as described above.)
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