From an insurance perspective it is important to know how you can recover when your business suffers a loss. Questions to consider when filing a business insurance claim:
1. Will your insurance coverage be adequate?
2. How do you go about getting a recovery?
3. What are your responsibilities in the process?
Knowing how the claims process works, what you should be prepared for and what you can expect when you face a loss is critical to know. The proof will be getting paid what you are due and the pudding is how it all works.
Understand Insurance Claims Concepts and Procedures
The purpose of purchasing insurance is to protect company assets from suffering loss. Those assets are both tangible and intangible. The insurance policy is based on the concept known as indemnification. This means that the insurer is to make the insured whole again assuming that the proper coverage and limits were purchased. In other words the company is to be put in the same position they were in prior to the loss, no more, no less.
Policyholders have a responsibility to act with consideration, demanding what they clearly are entitled to but not asking for things they believe are unlikely to be insurable. This includes creative claim theories, acting with a sense of fairness on valuation issues, and being transparent. Remember, insurance is a vehicle for financing fortuitous risk and not a means of becoming an occasional profit center. In order for insurance to work, a pooling of losses and premiums is required. In most years, an insurer is using your premium to pay for losses of others.
It is extremely important to remember there is a time limit of 60 days after the date of loss, in which you must file the form, Proof of Loss with the insurance company. Just reporting that you had a loss is not enough. You may lose your rights and leverage if this form is not filed within the time limit. Think of this deadline the same as you would for a tax-filing deadline–with a timely filing or written extension.
Some tips for a well-received claim:
- A typewritten claim has a neat, more acceptable appearance
- List all items separately
- Try not to group items into categories
- It is best to list property building-by-building and room-by-room in order to relate back to its physical placement
The depreciation shown varies according to condition and quality of property and only represents a general method of calculation. Your own calculation would largely depend on the life expectancy of your property.
Original or duplicate receipts are an important way to prove a loss. If no receipts are available, verification of ownership can be proven by affidavit. An affidavit should list the property in question and be signed by disinterested parties who thereby verify ownership and possession. Also, pictures are worth a 1,000 words – when there is a fire loss for example, many items in a room become unrecognizable – so it is a benefit to take pictures of rooms to document what exactly was in them to help you remember.
But before you can present your claim in the proper fashion, there are some duties that you must be familiar with so as not to jeopardize your recovery.
Watch for our next post which will cover 8 important things to keep in mind when presenting your loss and claim.