Owning a business can be very rewarding in many ways. However, from the moment a business is started, it is exposed to many different risks. The best way to protect this investment from legal liability or recovering from catastrophic events is to obtain a business insurance policy. While some businesses may never have to file an insurance claim, the vast majority will find themselves in an unfortunate situation in which it’s necessary to engage its insurance company. Knowing how to handle a business insurance claim can be the difference between continuing years of successful operation and losing your entire enterprise. This article helps business owners understand when to file a claim, how you may be compensated for loss, and the important role your attorney plays in the process.
When an accident happens, it can be easy to quickly assume that your insurance company needs to be involved. However, it may not always be in your best interest to file a claim. For example, if the amount needed to remedy the situation doesn’t exceed your deductible, or doesn’t exceed it enough to make filing a claim worthwhile, it may be a better idea to handle the situation on your own. Also, if filing a claim will increase your premium, will cause you to be dropped from coverage, or if it is merely a maintenance issue (these are typically rejected), filing a claim is likely not a good idea or worthwhile endeavor.
Conversely, if an event is so catastrophic that you need financial backing to make your business whole again, you’re going to want to go down the path of filing. According to a study by The Hartford, the most common commercial and property claims involve theft, water/freeze damage, wind/hail, and customer accidents. These incidents commonly require businesses to either temporarily cease operations or relocate to keep the business going. These business operations can also be a factor for compensation and a claim should be filed. It is best to consult your attorney to determine whether or not a claim should be filed.
Once you have weighed your options and decided that filing a claim would be in the best interest of your business, you should contact your insurance agent or company as soon as possible. Under many policies, if the insurance company is not informed of the issue right away, they may deny the claim. While most insurance providers recommend not performing any repairs until it has been authorized by the insurance company, it may be prudent to make temporary repairs to keep the damage from worsening. Moreover, many policies will also state that you must report incidents involving crime to law enforcement. If the incident is not reported, you may not be covered.
When an event occurs that requires coverage by your insurance company, your first concern will be who is liable and how will you be compensated for your loss. Unfortunately, there is no direct answer and it may depend on a number of factors (e.g., what happened? What is your coverage? When was the insurance company notified? Etc.). Due to the complexity of filing an insurance claim, it is important to get your lawyer involved in the process early and allow them to act as the intermediary between you and the insurance company.
Insurance is a very valuable asset to have, however, like any business they are looking to turn a profit. Insurance companies typically employ a number of methods to ensure they pay out the least amount possible. In order to make sure that you are fully compensated for your loss, hire a lawyer to negotiate on your behalf – that is often the best way to handle business insurance claims.
Should you have any questions or you would like to discuss this issue in further detail, please do not hesitate to contact us to schedule a free consultation.