Don’t Make These Commercial Insurance Claim Mistakes

When Filing a Commercial Insurance Claim, Don’t Make These Common Mistakes

If you own a small business, you know that it can be, well, risky business. Errors can be made, and you often learn as you go. There is at least one area, though, where knowledge goes a long way: filing commercial insurance claims. Mistakes can lead to problems, including violating your policy’s conditions.

Here are some ways to avoid the most common errors made when filing commercial insurance claim.

1. Get to know your policy.

First line of defense is to read through your policy completely. Don’t simply assume something is covered. For example, many business owners believe that their commercial property insurance covers damages due to natural disasters such as floods and earthquakes. They are wrong. Reading your entire policy can help avoid finding out the hard way that a particular event is not covered. It is also important to fully understand the steps you need to take to receive a full commercial insurance claim payment.

2. Understand that time is of the essence.

Filing a commercial insurance claim following a loss or accident or another covered event should occur as soon as possible. Some policies state that you must report a loss within 48 hours, but all commercial policies require prompt reporting of the incident to your insurance company.

3. Document pertinent details.

Take steps to make sure you have everything documented in detail so your insurer will have proof of damages:

• Take inventory of damaged property including values, costs, and amount of loss.
• Photograph items as proof of the damaged goods, equipment, utilities and other relevant items.
• Document any communication you have with your commercial insurance provider including time, date and items discussed as well as copies of any mailed or e-mailed correspondence with them.

4. Keep any damaged items.

Don’t make the mistake of getting rid of damaged items after you’ve photographed them. You’ll need to hold onto them as proof of loss. Try to prevent further damage. If you don’t it could lead to even more severe damage. Keep receipts for anything you spend on temporary efforts and submit your receipts to your insurance provider so you can be reimbursed.

5. Inform the police.

If a law is broken while your property was damaged, most commercial insurance policies require that the police be notified. For instance, if a burglary occurred, report it to the police. This pertains to commercial vehicles; your state may require that you report an accident, for example.

6. Be sure to file a claim instead of offering to pay out-of-pocket.

Should someone be injured on your property, do not offer to compensate the individual yourself rather than file an insurance claim. This is usually prohibited in general liability policies.

7. Cooperate fully with your insurance company.

Although it might seem like a given, cooperating with your insurance provider is often a condition of coverage. Your policy may include instructions to follow after a loss or event

8. Appeal if you feel the adjuster estimated damage is too low.

When you feel your lost property was undervalued by the insurer, don’t be afraid to make an appeal. Hire an adjuster to do a second assessment and estimate. If the second estimate is different than the first, a mediator not affiliated with you or the insurance company will usually decide how much money should be paid out.

9. Never admit liability.

Do not admit to being at fault. For one thing, it may turn out you aren’t at fault. Admitting liability could result in a lawsuit. Liability insurance generally states that the policy owner cannot take on any obligation without the insurance company’s approval. You are required to not do or say anything that could hinder your defense.

10. Follow up with insurance adjuster.

When you file a claim, be patient but keep track of how long it is taking. If you still have not heard back from the adjuster for several weeks, ask for a progress report. You can call directly or make the request in an email.

How Is Commercial Property Valued?

If your property is damaged, it will usually be valued based on actual cash value or replacement value.

Actual Cash Value

Actual cash value refers to how much the item is worth according to the current market. The insurer will determine current cost and then subtracts depreciation, which is determined by how old the item is and how much longer it could be used at the time of the loss.

Insurance companies generally pay a lower price for this kind of protection because they pay less for the damaged property.

Replacement Value

Replacement value refers to how much it would cost to replace the item that is damaged or stolen with a brand-new property.

A replacement value approach results in larger settlements, so this kind of protection costs more.

Common Mistakes Made When Buying Business Insurance

If you are a new business owner or are comparing policies to make sure you have the best deal, keep these suggestions in mind.

• Don’t forget about Workers’ Compensation. Details vary by state, but Worker’s Comp is required by law. You probably need it even if you have one employee, you have employees but also use contractors or you are an independent contractor and hire out work.
• Purchase general liability insurance. Even forming an LLC (Limited Liability Company) won’t protect you from all liabilities.
• Remember: your homeowner’s insurance won’t cover a business run in your home. You still need business insurance. You might need general liability for wider coverage, business personal property insurance which applies to both work and home use, and premises liability insurance to cover injuries that occur in your home-based office. Other policies might depend on what kind of work you are in.
• Update policies as the company grows. A very common mistake is not updating policies as the company grows. Review your policies regularly, looking at types of coverage and coverage limits.

Now What?

Once you’ve assessed your needs, you can start comparing quotes from several insurance companies. A quick and easy way to get the process started is using this online tool that lets you get quotes from several providers. You can then compare quotes and, ultimately, find policies that are better for you.