Business involves many risks, including fires, vandalism and water leaks, among others. These risks can be mitigated by acquiring business insurance. This kind of insurance covers a business, its property, its employees and customers against different kinds of harm. It provides the financial resources needed for the restoration of the business to pre-loss conditions. So, if you’re a business owner, obtaining business insurance is of paramount importance.
Regrettably, some businesses never receive the financial resources intended to restore them after incurring a loss resulting from a risk. This is what is widely known as business insurance denial. If you’re in this unfortunate situation, you need to solicit the services of a bad faith insurance attorney to fight the insurance company on your behalf. This is where we come in!
Stop Insurance Denial Law Firm is a law firm that offers competent legal assistance and representation in insurance claim denial cases. We represent those who have been denied insurance unjustly and do not have the means or understanding to fight large insurers. We help individuals and business owners all over the United States navigate business liability and insurance issues.
Top 5 Reasons for Business Insurance Denials
In most cases, insurance companies are very reluctant to release financial resources to businesses that have endured a loss resulting from a covered risk. There are different reasons why insurers deny business loss claims, including:
- Fraudulent claims
In these harsh economic times, most people are not having it easy, which is why some of them are resulting to extreme measures to gain finances fraudulently. The insurance industry is one of those sectors that have been hit hard. One of the most popular schemes cooked up by fraudulent policyholders is orchestrating burglary attacks or faking car crashes and injuries in an attempt to rip-off insurance companies.
With the increasing number of people who think that cheating their insurers is acceptable, insurance companies have got smart and will not blink twice when denying insurance claims they deem fraudulent. One of the strategies used by insurance companies is to analyze the claims history of their policyholders to detect any patterns in their past claims regarding their type and frequency. Insurance agencies also hire private investigators to investigate insurance claims to ascertain their authenticity.
If you have submitted a lot of claims, claimed a lot of losses, or your insurance claim does not match the typical pattern, your insurance company will have this information and they may suspect you of fraud, thus deny your insurance claim. So, to avoid any misrepresentation of yourself, it’s best to be honest and disclose everything necessary when filling out the insurance claim application.
- Filing post-deadline
Most insurance companies require policyholders to file their claims within a specific timeframe. For instance; there are those that require claims to be filed within 90 days of the event necessitating the business insurance claim, others will allow for as long as 120 days, while others will allow for as little as 30 days. If you file your business insurance claim later than the deadline, your claim will most likely be declined. Therefore, it’s important to file your claim in a timely manner.
In addition, you should submit your claim along with proof of timely filing. That proof should be something that indicates when the insurance claim was initially submitted, or when and the number of times it was resubmitted. If you submitted your business insurance claim electronically, you should print an electronic report indicating the initial submission.
Even though filing a claim post-deadline is good enough reason for an insurance company to deny a claim, the decision to deny your claim can be overturned if you had a valid reason for not submitting your claim on time. So, if you have a valid, verifiable reason as to why you were unable to submit your business insurance claim within the stipulated deadline, you can file an appeal. Stop Insurance Denial Law Firm can help you with this intricate process.
- Omission of relevant information
Submitting an insurance claim that does not have certain crucial details will come back to haunt you in the form of a business insurance denial. Insurance companies almost always discern omissions and count them as more than enough reason to deny insurance claims. So, it’s important to include all relevant information in your claim form and as per the insurer’s guidelines.
Besides data omission, data inaccuracy is another reason for denial. Claimant’s name, date of birth, and social security are all common places for misspelling and typographical errors. Also, submitting information that is out of date – particularly in the case of addresses – is also subject to insurance denial.
- Exceeding coverage limits
It’s important to note that insurance companies do not provide unlimited coverage. Every insurance policy has its limits. When purchasing insurance, you get to select the type and extent of coverage you want. The type of coverage you choose will determine the specific damages your insurance company will pay for. So, regardless of the damage you have incurred, there is nothing that your insurer can do if your business insurance claim exceeds your coverage limits.
Besides being denied compensation based on the fact that you have exceeded coverage limits, you can also fail to obtain compensation if your coverage limits have been exhausted, or if you did not purchase the insurance coverage that you are claiming. For instance, your claim for repairs can be denied if you do not have comprehensive or collision coverage.
- Violation of state law
Insurance companies also deny claims if the damages resulted at a time when policyholders were violating state law(s). For instance, an auto insurer can deny your insurance claim if you incurred damages at a time when you or your driver was driving illegally, without a valid license, or while under the influence. Your insurer can also deny your claim if they believe that an accident or incident that took place was avoidable.
Besides being denied compensation due to violation of state law, you can also be denied compensation if you violate the terms of your insurance policy. For instance, if you assume responsibility and pay third-party claims out of pocket, then you may be in violation of a policy condition. Also, if it’s established that an incident resulting to damage or loss occurred when you were using your vehicle or property for a purpose other than the one stated on your policy, then the insurance company can deny the claim.
Less Common Reasons for Business Insurance Denials
- Late processing of claim by the insurer
One of them is late processing of the insurance claim by the insurance company. At times, an insurer may delay the processing of an insurance claim. This often occurs when a claim is misplaced, thus doesn’t get into their system before the deadline. While this fault comes from the insurer’s end, it can result in a denial. This is one of the kinds of denials that can be successfully appealed.
- Lack of specificity of insurance claim
Submitting a claim that does not clearly state why you’re entitled to compensation will likely result to an insurance denial. So, one important lesson you’ll learn from your bad faith insurance attorney is that one of the best ways to minimize the probability of a business insurance denial is to be highly specific when presenting your claim.
- Submitting claim to the wrong insurer
Insurers usually hand over the management of some of their insurance plans or some aspects within their insurance plans to other firms. At times, changes occur, which they usually communicate to policyholders. If you, by any chance, fail to get communication about such changes, you may end up sending your claim to the wrong company instead of the one currently managing claims for your insurer. This mistake can lead to an insurance denial.
Mistakes to Avoid When Filing Business Insurance Claims
Like many business owners, you make mistakes when filing your insurance claim. While the mistakes are easy to make, they can have dire consequences, including delayed payment or even a business insurance denial. Here are the various mistakes made by many business owners as well as how you can avoid them:
- Failing to read your insurance policy
Few people enjoy reading the lengthy insurance contracts. Yet, reading the policy comprehensively is crucial as you need to have an understanding of what it does and does not cover. Once you receive your policy, it’s important that you read thoroughly. If you do not understand the wording, be sure to ask your broker or agent for explanations. Also, be sure to review the policy again before filing a claim to ensure that you understand the obligations you’re required to fulfill before obtaining compensation.
- Failure to inform your insurer right away
One of the commonest mistakes by many business owners is failing to contact the insurer immediately after a loss that is covered by their insurance policy. When too much time passes, physical evidence may disappear and witnesses’ memories may fade. That’s why insurance companies require events to be reported immediately as claims are easier to adjust when the evidence is still fresh.
Most business insurance policies set timely notice as a condition for coverage. For instance, general liability and umbrella policies require policyholders to alert their insurers as soon as practicable in the event of an incidence, offense, claim, or lawsuit. Failure to report a claim or loss within a reasonable amount of time, the insurance company may deny your claim.
- Being uncooperative with your insurer
Your insurer will need your full cooperation to settle your business insurance claim effectively and efficiently. They may require you to provide crucial information related to your insurance claim. Failure to cooperate with your insurer or failing to comply with their requests for information may give them grounds to deny your claim.
To avoid this mistake, you should familiarize yourself with the loss conditions of your policy, which summarize the obligations you must fulfill under your insurance contract to get compensation for a loss or claim. Many insurance policies particularly stipulate that policyholders must cooperate with the insurance company in the investigation.
- Poor record-keeping
When an accident or incident that results in damage or loss occurs, it’s important to take photos or videos of the scene and submit them to your insurer along with your claim. This can serve as evidence and can help verify your written description of the events as well as of the damaged property. Poor documentation of evidence may delay or result to claim denial for lack of evidence.
In addition, you should also keep records of every communication between you and your insurer in regard to your claim. You should record the time, date, and the content of each verbal, written, and electronic communication. This will help to clear the air in case any misunderstandings will ensue during the processing of your claim.
- Discarding damaged property
If property at your premises has been destroyed by a fire or other peril, it would be a costly mistake if you throw it away. If you do, you’ll be destroying valuable evidence of a loss, thus increase the chance of a business insurance denial. What you need to do is to leave the damaged property at it’s so that the adjuster can inspect it. If several weeks pass by without hearing from the adjuster, you should follow up with a phone call to ask for a progress report.
- Failure to call the police
Many commercial property policies require policyholders to contact law enforcement agencies if a law has been broken. For instance, vandalism is generally forbidden by law, so you’re obligated to call the police before you file a vandalism claim. Moreover, the standard Business Auto Policy stipulates that policyholders must contact the police if a covered auto or any of its components has been stolen. A police report can be of great advantage as it can help verify the facts related to the accident or loss, thus accelerate the compensation process.
- Acknowledging you were at fault
When an incident or accident happens in which someone incurs injuries or their property is damaged, you should not admit liability. There are three reasons for this. The first reason is that the accident may have occurred quite different from what you think, or it may have involved certain factors that weren’t obvious at the time of the incident.
The second reason why you shouldn’t admit responsibility is that the injured person may file a lawsuit against you should their injuries turn out to be more serious than you initially thought. Having accepted responsibility, your insurer may not be able to defend you against the filled claim or lawsuit.
The third reason why you should not admit fault is that most liability policies disallow policyholders from assuming any obligation without their insurance companies’ consent. If you admit fault, then this will be seen as a breach of the insurance contract, thus serve as ground for the insurance company to deny coverage for your claim.
- Paying 3rd-party claims out of pocket
In the event of an accident that leaves another person or persons injured or their property damaged, you may be compelled to pay them out of your pocket rather than file an insurance claim. This is a bad idea for the very reason that you may be violating a policy condition. You have to remember under your liability policy, you’re prohibited from assuming any obligation or willingly making any payment without the consent of your insurer.
- Not questioning the insurance company’s calculations
Most auto and property physical damage claims are usually settled based on the insurance company’s calculation of the actual cash value of the damaged auto or property. Regardless of how your insurer values your damaged property, you should not assume that the estimate they provide is accurate. Therefore, it’s advisable to hire a public adjuster so that they can give you a realistic estimate of the cost of repair or replacement. The public adjuster will negotiate with the insurance company’s adjuster on your behalf so that you can get reasonable compensation.
Importance of Hiring an Attorney
Your insurance company is a business just like any other, so they are in it for the money. One of their goals is to maximize profits, so they will be on the lookout for mistakes on your part so that they can deny your claim. To ensure that their mission succeeds, they hire a battalion of lawyers, adjusters, private investigators and other experts. If you face this battalion on yourself, you’re doomed from the word go.
Hiring a competent lawyer to represent your interests can greatly increase your chances of getting a positive outcome. Attorneys at Stop Insurance Denial Law Firm are highly experienced in the practice of bad faith insurance, thus can make a huge difference in holding your insurance company accountable for their obligations to you.
Finding Business Insurance Denial Appeal Attorney Near Me
Has your insurer denied your business loss claims? Stop Insurance Denial Law Firm will help put an end to this injustice and get you the compensation you rightfully deserve. We are a law firm serving clients all over the United States, and we are dedicated to helping victims of insurance companies acting in bad faith. Call us today at 310-878-1771 or stop by our office so you can learn more about our services and how we can help.