How to ensure your claim gets paid
Key insurance claim mistakes:
- Failing to understand your policy
- Waiting too long to file a claim
- Failing to document any damage
- Getting rid of the damaged property too soon
- Not calling the police
- Admitting fault and/or liability for an incident
- Not cooperating with your insurance company
- Not questioning the adjustor’s estimate if the amount seems low
According to the Insurance Information Institute, there are over seven million small businesses in the U.S. Commercial insurance is a necessary expense for all businesses. One study by a major insurance and financial services company estimated that 40% of small businesses will experience property loss or liability within the next 10 years. Of course, you hope you won’t be among those 40% of business owners but chances are you might need to make a claim at some point.
If you wind up having to file a claim about something, it’s important to avoid the common mistakes that can affect whether or not you get paid. Here are eight.
Mistake #1: Failing to read or understand your insurance policy
Understanding your commercial policy is essential; otherwise, you might think something is covered when it’s not. For instance, most standard policies don’t cover damage caused by hurricanes, earthquakes, floods, and other natural disasters.
Make sure you go over your policy so you understand exactly what it covers…and what it doesn’t. Review any endorsements included in the policy, as well. Insurance endorsements act as amendments that can be attached to a commercial policy. You don’t want to waste time filing a claim that will go nowhere.
Mistake #2: Waiting too long to file a claim
Most commercial policies require you to file a claim within a certain timeframe after the incident, which means you need to contact your insurance company right away. Acting fast will make it easier to determine how much you should be awarded. Waiting too long could make your insurer suspicious about the severity of the damage or injury.
Most general liability forms require you to notify your insurer ASAP after an occurrence, offense, claim, or lawsuit. If you miss the deadline, your coverage might be denied.
Mistake #3: Failing to document damage
You can’t make a claim without submitting proof of damage. You need damaged property documentation to get a payout for making repairs and getting back to business. You’ll want to take pictures of the damage, including the physical property/building, equipment, goods, and utilities.
Documentation should include:
- Time, date, and conversations (in-person and on the phone)
- Copies of any mailed correspondence
- Copies of email exchanges
If you speak to someone on the phone, send him or her a summary of the conversation and ask for a transcript. Keep the transcript in a file in case there are any questions (or disputes) about your claim.
Mistake #4: Getting rid of damaged property too soon
Resist the temptation to throw out damaged property or equipment. Leave everything alone until the insurance adjustor can inspect the damage. Most policies require you to do this. Take steps to protect property or equipment from further damage, such as covering broken windows/doors, furniture, or equipment.
The same rule applies to any vehicles covered under your commercial auto policy. Most policies cover collision damage and injuries but you still need to create a record of said damage. The insurer will need to complete an inspection before any reward can be given.
Mistake #5: Not calling the police
You must report claims related to criminal activity to the police. This might include damage or theft from a burglary or equipment that’s been stolen or damaged by an employee or customer. Most standard business policies require you to file a police report for covered property, equipment, or commercial vehicles. In some states, you also need to call the police after an accident involving your business or covered vehicle.
This report will become part of the documentation needed when it’s time to file an insurance claim.
Mistake #6: Admitting fault
If there’s damage or an injury involving an employee, customer, or client, do not prematurely admit fault. If the injured party files a claim, admitting liability will make it harder for your insurer to defend you. In the end, you could wind up losing the case and having to pay out for damage or injuries. Plus, your insurance provider could deny any claims, since admitting fault could be considered a breach of contract.
Let the police determine fault. That’s their job, not yours.
Mistake #7: Not cooperating with your insurance company
Even though the claims process can be frustrating, it’s important to cooperate with your insurer. In fact, it’s often a condition of your coverage. The ISO commercial property form states this clearly, as does the ISO liability form.
Failing to provide the required information or evidence to your insurer can result in a delay in payment or an outright denial of your claim.
Mistake #8: Not being proactive when it comes to the adjuster’s calculations
After an incident, your insurer will send an adjuster to calculate the amount of the loss. You will be awarded based on the actual cash value or replacement cost according to the terms of your policy.
No matter the cause of the damage, you’ll need an accurate estimate in order to get enough money to make repairs or replace your property or equipment. However, you shouldn’t just accept the adjuster’s calculations at face value. If you feel that the estimate is too low, discuss the issue with your insurer. If needed, don’t be afraid to contact an attorney or your state’s insurance department.
Ensure you have the right commercial insurance coverage
These eight common mistakes can affect the outcome of a commercial claim which can affect your ability to keep doing business. You also need to ensure that you have the right coverage to protect your business.
- General liability
- Professional liability
- Property insurance
- Cyber liability insurance
- Worker’s compensation
- Product liability
- Commercial auto
- Business interruption
Avante Insurance can help you secure the right commercial insurance to protect your life’s work. Contact us to talk about your business needs and request a quote. We will ensure you have the right coverage to protect the enterprise you’ve worked so hard to grow.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.