Failure to Notify Your Insurance Broker Immediately
When an accident or incident occurs that is potentially covered by your insurance policy you need to contact your broker right away, even before you contact your insurer. The standard commercial property form requires you to notify the insurer as soon as practically possible of any loss or damage to insured property. The standard commercial liability form requires that you notify the insurer as soon as practical in the event of an occurrence, offense, or suit. If you fail to report a loss or claim within a reasonable amount of time, your insurer may deny coverage on the basis that you’ve breached the insurance contract. While all of this is true it is also true that you, as the insured, may not benefit, in the long run, if you report every possible claim incident to your insurer. While a good broker is your claims advocate and is there to help you make sure your policy responds when necessary, a good broker will also be able to advise you on when you may not want to file a claim. Insurer’s track an insured’s claim history and may cancel or non-renew a policy due to frequent claims even if the payout on each claim is nominal. Once you have had a policy cancelled or non-renewed due to too many claims it will be very difficult to find a new carrier that is willing to provide the coverage at a reasonable price. It is important that you discuss all these possibilities with your broker before a claim is submitted to your insurer. Remember a good insurance broker should be there to help you manage your finances and to minimize your total out of pocket costs – if in the long run not reporting a small claim will benefit you or your business you should be made aware of it. After discussing the loss with your broker, your broker may advise you to notify the insurer of the claim “for record only” – this puts your carrier on notice of a potential claim and therefore meets an Insurer’s requirement that the claim be reported in a timely manner however it is not a formal reporting of a claim, only that a claim may be pending.
Failure to Retain Damaged Property
If property at your premises or worksite has been damaged by a fire or other peril, you might be tempted to throw it away. Don’t do it! A property damage claim should be reported to your insurance broker as soon as possible after the damage has occurred. Your broker will advise you on the best course of action and will help you to report the claim to the insurer. Once a claim is reported to the Insurer an adjuster will typically contact you within a couple of hours and will also typically come out to visit the site within 24 – 48 hours. However sometimes, especially after a catastrophic event such as a hurricane, your assigned adjuster will not be able to contact you or get out to the site of the loss for several days. While both you and your insurer want to protect your property from further damage after a claim has occurred, if possible, it is always best to leave the damaged property in its original location until after you have spoken to the adjuster or until the adjuster has come out to inspect the site. If you must alter the site or the damaged property prior to speaking to the adjuster or prior to the adjuster visiting the site, you should take as many pictures as possible of the site in its unaltered damaged condition before you begin any clean up. Again, do not throw away any damaged property before the adjuster has either inspected the site or advised you to do so as a typical property policy requires you to set the damaged property aside for examination. In speaking to your adjuster, prior to his actual visit to the property, the adjuster may advise you to take certain actions to further safeguard your property – this may include getting a restoration company out to the property ASAP to begin cleaning up or other actions that may alter the site of the incident. If you have approval from the adjuster to take this type of immediate action, you should feel comfortable doing so. In rare situations, such as after a major hurricane, an insurer may be so overwhelmed with claims that they simply do not have enough adjusters to contact you right away – in such situations it is not uncommon for it to take several days, or more, before you hear from an adjuster – it is a general practice that the insurer will want you to do what is necessary to safeguard the property from further damage. When this occurs, you should seek the advice of your broker as to how to proceed to safeguard the property as well as not violate policy provisions.
Good record keeping is essential is a loss occurs because insurers require detailed information to settle a claim. For example, commercial property forms require you to provide complete inventories of the damaged and undamaged property, including quantities, costs, values, and the amount of loss claimed. Document every communication you have with your insurer regarding your claim. Keep a list of the names and phone numbers of everyone you speak to as well as the date and time of the call. If you mail/email copies of any documentation to your insurer, be sure to keep copies of all documents sent.
Failure to Cooperate with Your Insurer
Cooperating with the insurer is a condition of coverage in many business insurance policies. If you fail to provide information your insurer needs to process your claim, your actions may give the insurer grounds to deny coverage. Even if your insurer doesn’t deny the claim, your failure to cooperate may delay your claim payment.
Not Calling the Police
The standard commercial property policy obligates you to contact the police if a law has been broken. Further the standard commercial policy states that you must call the police if a covered auto or property has been stolen. A police report serves as proof that a loss occurred and can help verify the facts related to your claim.
Not Questioning Your Insurer’s Calculations
If property under a commercial property policy is damaged, the insurer will determine the amount of loss based on the item’s actual cash value or its replacement cost, whichever applies. No matter how your damaged property is valued, you should obtain realistic estimates of the cost to repair or replace damaged property. Don’t assume that your insurer’s estimates of theses costs is accurate. Repair and replacement costs vary widely from place to place, further construction cost in one area may be significantly higher than those in another. If you disagree with an adjuster’s valuation of a loss, let the insurer and your broker know.
Failing to Follow Up With Adjuster
Once you have filed a claim, you can sit back, relax, and wait for payment from your insurer, right? The answer is no! Don’t lose track of your claim. If several weeks go by and you have not heard from the adjuster, follow up with an email or phone call. Ask for a progress report.
Admitting Your at Fault
When an accident occurs in which someone else is injured or their property is damaged don’t admit liability. The cause of the accident may be different than you think and therefore you should never assume any obligation without the insurer’s consent. An admission of fault could harm your defense. It might also constitute a breach of the insurance contract, which could give the insurer grounds to deny coverage.