Commercial property insurance policies reimburse businesses for direct physical loss or damage to insured property caused by a covered peril, such as a fire, wind storm, burst pipe, vandalism or theft. But in the wake of a covered event, insurance companies impose certain obligations on policyholders, and failure to comply can give the insurance company an excuse to delay, reduce or even deny your claim. Understanding your responsibilities and knowing what steps to take in the immediate aftermath of a loss can help protect your rights and maximize your recovery.
Providing Timely Notice to the Insurance Company
Commercial property insurance policies generally require that policyholders notify the insurer promptly after a loss. Typically, the insurance company does not define an exact amount of time, using less specific language such as “immediately,” “as soon as practicable,” or “within a reasonable time.” Insurers generally require prompt notice because it allows them to investigate the cause of the damage while evidence is still available. The longer it takes an insured to report the claim, the more likely the insurer will contend that the delay hampered its investigation. As waiting too long to report the claim can cause unnecessary disputes, notify your insurance company as soon as possible after you discover the loss.
Protecting Property from Further Damage
After an event causes damage, policies typically require insureds to take reasonable steps to prevent additional damage from occurring. This is important because insurance companies generally do not cover losses that could have been avoided through reasonable mitigation. For instance, if your building sustained broken windows and roof damage during a windstorm, reasonable protective measures may include boarding up the broken windows and placing a tarp over the roof damage to prevent rain from getting in once it is safe to do so. Or if a pipe burst and flooded your premises, reasonable steps would likely include turning off the water supply and mopping up standing water.
Be sure to keep detailed records of your mitigation efforts, and take photos or video to document the damage before and after your interventions. Save receipts for materials and/or labor costs, since many policies cover reasonable mitigation expenses.
Avoid discarding damaged property until the insurance company has had the chance to inspect it. If damaged items must be removed for safety reasons, document them thoroughly with photos or video.
Meeting with the Adjuster
The insurance company will likely send an adjuster to inspect the property and evaluate the damage. Accompany the adjuster on the inspection, pointing out every item that was affected. If the adjuster indicates that something is not covered, ask him or her to point to the specific policy language that supports that position.
Submitting a Proof of Loss
Creating a complete record of your losses can be a daunting process, but the more evidence you have to support your claim, the more difficult it will be for the insurer to undervalue your losses. In addition to taking photos and/or video of all affected areas of the property, prepare a detailed inventory of damaged or destroyed contents. Gather any purchase receipts, invoices, maintenance records or other applicable documents that could attest to value.
Many commercial property policies require policyholders to submit a timely proof of loss, which is a formal, sworn statement identifying the damaged property and the value being claimed. This document is typically due within the specified time period outlined in the policy or upon the insurer’s request. Be sure to comply with the time restrictions, as failing to do so could jeopardize your coverage.
Strive to make your proof of loss as accurate and thorough as possible, supported by documentation where possible. Avoid exaggerating or including nonexistent losses, as this could give the insurer grounds to deny coverage on the basis of fraud.
Getting Independent Estimates
When commercial property damage occurs, disagreements commonly arise over the value of the loss. Insurance company estimates may not accurately reflect current material prices or local labor costs, particularly after a widespread disaster, when demand for contractors and/or materials puts upward pressure on prices. Obtaining one or more estimates to rebuild or make repairs from qualified, licensed contractors allows you to evaluate whether the insurer’s estimate lines up with current market conditions. If the insurer’s estimate is substantially lower, these independent evaluations can serve as evidence during negotiations. For larger claims, you may be well-served by hiring a public adjuster to help you prove the value of your losses.
Looking Ahead
While recovering from significant property damage can be challenging for a business, understanding the insurance claims process and satisfying insurer obligations in the immediate aftermath of a loss can help ensure your claim proceeds more smoothly.
If your business insurance company has denied or is challenging your claim, contact Schwartz Conroy & Hack, PC. We have the expertise, experience and tenacity to make insurance companies keep their promises to you and your business.
