In the previous post Proof of Loss: The proof is in the pudding, we shared the importance of knowing how the business insurance claims process works so you can get paid what you are due if you suffer a loss. These 8 points will help you navigate the claims process successfully.
1. Familiarize yourself with lines 90 through 122 of your insurance policy or the “Duties in the Event of Loss” section. You cannot afford to violate these duties. This policy section also grants authority to file your claims as well as authority of a third-party to file a claim on your behalf.
2. Calculate your loss first before filing your claim. You have the advantage of telling the Company Adjuster you know something of what you are entitled. Compare this to just reporting an uncalculated loss and giving the Company Adjuster the authority to direct and decide how much you should claim.
3. Remember these time limits:
- 60-day time limit, after date of loss, to file the Proof of Loss.
- 20-day time limit, after Appraisal notice, to select an Appraiser.
- 12-month time limit, after date of loss, if you elect to file a suit.
- 60-day time limit, before date of loss, for certain coverage pertaining to vacant or unoccupied buildings.
4. Prove adequate insurance. If the insurance company determines that you carried too little insurance and attempts to impose a penalty, remember, you carry the burden of proof, you may still be able to eliminate penalties by proving adequate insurance. For example: if the problem involves a building structure, you may shop for a total replacement cost estimate much the same as insurance companies shop for repair estimates. You may locate a licensed building contractor who will establish that your insurance was adequate when compared to the contractor’s replacement estimate. Replacement estimates are not to be confused with repair estimates.
5. Salvage is that which is saved. By claiming only the portion of your loss that remains after deducting salvage value, you maintain ownership of that item and the salvage remains your property. Salvage bids establish salvage value.
6. Save all remains of property until you have received your settlement. The burden of proof is on you as the policyholder. Anything to help prove your loss is valuable. Photos, warranties and manuals are also helpful. If you must discard certain debris prior to settlement, it would be wise to first take photographs.
7. Understand the Appraisal Procedure. If you have differences with your insurance company, you should know of a quick, fair, inexpensive procedure called Appraisal. It is a form of arbitration with a binding award conducted by disinterested parties that is designed for “amount of loss or damage” disputes. You must first remember to file the Proof of Loss, even if not requested by the company, within 60 days from the date of loss. Make certain if you go beyond 60 days that you have been provided a written extension of time by the insurance company—similar to a tax-filing deadline. You may request the Appraisal procedure within a “reasonable” time after filing the Proof of Loss or at the time of filing the Proof of Loss. NOTE: Many recent changes in wording have included eliminating the Appraisal process and instead require parties go to court.
8. The filed Proof of Loss represents the amount of your claim and is a demand for payment. If your loss exceeds your insurance coverage you may wish to claim that portion as an income tax deduction. To protect that deduction, be sure that the Proof of Loss form states all of your loss and not only your loss covered by insurance.
Watch for the final post in this series… Understand the Insurance Adjustment Process.