Filing Late and Other Ways to Have a Claim Rejected

​One of the biggest mistakes you can make if you incur damage to your business premises is to wait too long before filing the claim with your insurer.

The owners of a hotel in Dallas learned this the hard way when a U.S. Circuit Court of Appeals held that the business had waited too long to file a claim with its insurer after suffering hail damage.

The court ruled that because the hotel had waited more than 19 months to file the claim, it was impossible for the insurer to ascertain exactly when the damage had occurred.

The hotel's property policy required that the insured make "prompt notice" of any claims.

But the insurer rejected the claim when it received it for a hailstorm that had happened more than a year and a half earlier, on the grounds that it could not determine what had caused the damage or when the damage occurred. This was crucial since the policy had expired 17 months earlier - two months after the storm had allegedly damaged the hotel.

Believe it or not, filing late is a common problem and it is one of many mistakes business owners make when filing claims. The following are surefire ways to risk having your claim denied or disputed by your insurance company:

Not contacting your insurer immediately
While most insurance policies state that you must notify the company promptly of a loss, what counts as "prompt" may be a little vague. However, you can wreck your claim by reporting a loss so late that it "prejudices" the insurance company.

For the most part, you should take steps to notify your insurer as soon as possible after you become aware of a loss.
 
Failing to document the damage
Take pictures and itemize everything that was damaged. Often, you will have to make repairs immediately to prevent additional damage, or move machinery to a new location. If so, be sure to photograph the original scene to document how it was before you started your clean-up effort. Also take photos of any repairs you make.
 
Disposing of damaged goods
If your business clean-up includes removal of items such as water-damaged merchandise, flooring or insulation, keep it all, even if it has to pile up in the parking lot. The damaged materials are all evidence of the impact of the disaster on your business.
 
Not appealing an insurer's low estimate
After the claims adjuster inspects the damage, the insurance company will give you a damage estimate. If you think it's too low, you can appeal. We can help if you feel the estimate is too low.

But some businesses will hire an outside adjuster to make a second estimate, and then the claim will go to mediation for a final resolution.
 
Not reading your policy
You should understand exactly what your policy covers. For the most part, commercial property policies will not cover flooding or earthquake damage. That kind of coverage will often require a separate policy or rider.
 
Not being prepared
If your business suffers damage, you'll be better off if you know what to do in advance. Some advance steps you can take are:

• Reviewing your policy to make sure you have adequate coverage.
• Knowing where your insurance policy is kept.
• Keeping an extra copy of the policy off-premises or in a safety deposit box.
• Having our telephone number and e-mail address in the contacts on your smartphone, so you can call us immediately if you suffer a claim.

 
A final word…
Filing a claim is usually not a difficult process, but you should be prepared in advance, like making sure you keep good records of all your assets, including receipts, payment schedules and more.
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Finally, if you are unsure whether you should file a claim on any of your commercial policies, you can always give us a call to discuss the event and we can assist you.