ONE MISTAKE you want to avoid if you incur property damage to your business is to wait too long before filing the claim. The owners of Dallas Plaza Hotel 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 nearly two years to file the claim, it was impossible for the insurer, American Insurance Co., to ascertain exactly when the damage had occurred. The hotel’s property policy required that the insured make “prompt notice” of any claims. The insurer rejected the claim when it received it 19 months after the initial damage. It reasoned that there had been so many hailstorms in the area that it could not determine what caused the damage or when the damage occurred and, specifically, whether it had occurred within the policy period.
The lesson: waiting too long to file an insurance claim can be costly and businesses risk seeing their insurer deny the claim as most policies require that claims are filed in a timely manner. But that’s just one way to have your claim denied. The following are other sure-fire ways to risk having your claim denied or disputed by your insurance company.
Not reading your policy
Understand exactly what your policy covers. Typically, 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 has suffered damage, you’ll be better off if you know what to do in advancer (see the box top right for how to be prepared).
Advance steps
- Create an emergency action plan.
- Review your policy to make sure you have adequate coverage.
- Know where your insurance policy is kept.
- Keep electronic or physical copies offsite.
- Have your insurer’s claims phone and e-mail information in the contacts on your phone, so you can call them immediately if you have to file a claim.
Not keeping damaged goods
If your business cleanup 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. Take photos and itemize everything that was damaged. You may have to make repairs immediately to prevent further damage, or move machinery to a new location. If so, photograph the original scene to document how it was before you started your cleanup. Also take photos of any repairs you make.