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 Dallas Plaza Hotel learned this the hard way last month 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 in July 2009.
The court ruled that because the hotel had waited more than 19 months 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.
American Insurance rejected the claim when it received it in October 2011, saying that there had been so many hailstorms in the area before and after July 2009 that it could not determine what caused the damage or when the damage occurred and, specifically, whether it had occurred within the policy period, which expired in September 2009.
Believe it or not, this is a common problem for businesses and the lesson from this case is that you should inform the insurer as soon as possible after incurring damage that may be covered by your insurance policy.
It is one of many mistakes business owners make in filing claims. The following are surefire ways to risk having your claim denied or disputed by your insurance company:
1. Not contacting your insurer immediately. Many business owners fail to contact the insurer on time and risk a situation similar to that experienced by the hotel in Dallas.
2. 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.
3. Not keeping 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.
4. Not appealing an insurer’s low estimate of damage. 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 you if you feel the estimate is too low.
Some businesses will hire an outside adjuster to make a second estimate and then the claim will go to mediation for a final resolution.
5. 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.
6. Not being prepared. If your business has suffered 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 smart phone, so you can call us immediately if you suffer a claim.