Operating a business means carrying multiple risks, whether it may involve property damage, employee injury, natural disaster, or unforeseen liability issues. According to Charles Spinelli, this is where business insurance comes in to help protect businesses from potential financial loss caused by these events.
However, many small to medium businesses wonder about the procedures for filing a claim if any unfortunate event takes place. Having a thorough understanding of the claims process can come in handy for them to stay at peace and well-versed to go ahead if any disaster hits.
What is Business Insurance
Similar to life or health insurance, business insurance is also an official agreement or contract between an insurance company and a business entity. The insurance contract includes the type of coverage, cover limit, inclusions, exclusions, as well as terms and conditions. The business owner remains liable to pay a set of premiums based on the above factors to stay protected.
On the other hand, the insurer remains accountable to provide financial protection for the specified risks stated in the insurance policy. The risks may include natural disasters, lawsuits, damage, or employee injuries.
What Prompts a Claim
Once a covered loss occurs, the claim process begins. For instance, if a flood or hurricane damages the business property or its assets, or a customer becomes injured due to falling on the floor of the premises, the business would have the right to ask for compensation. Make sure to go through the policy to ensure the loss is under the coverage of insurance before filing a claim. Here are the steps
- Notifying the Insurer
The primary step before producing a claim, notifying the insurance company, is essential once the loss takes place, in the opinion of Charles Spinelli. Most insurers mention a timeline for reporting and filing claims. When reporting, the business should share full details, including the kind of accident or disaster, time, location, and description of the incident.
Prompt reporting is essential to ensure the claim process begins quickly. In certain incidents, the insurer may send its representative to apprise of the extent of the loss physically.
- Providing Documentation
Submission of important proof of loss is vital for the business as evidence. This should include photographs of water-logged office space (in case of a flood), damaged office assets, inventory, receipts for repairs, inventory records, and a statement of witnesses.
The more thorough the documentation, the easier it is for the insurer to evaluate the claim. Maintaining accuracy is essential to prevent further disputes.
- Evaluation and Analysis
As stated above, the insurance company usually sends its representative, known as an adjuster, to assess the extent of damage or the whole situation. An adjuster documents the facts after having a look, assesses the possible cost of repairing or replacing, and determines the amount of compensation. The business owners should fully cooperate with the officials and provide any necessary information.
- Reviewing the Claim for Payment
Upon completion of the evaluation, the insurance company can either approve, partly approve, or reject the claim. Subsequently, the insurance company will propose a settlement amount. If the request is denied, a business owner can seek the assistance of a lawyer and file an appeal, if necessary, by providing additional proof.
- Getting Paid
The insurance company will issue the settlement amount once the case is finalized. The premium aims to assist the policyholder in restoring property or replacing lost items. Therefore, the business needs to use the funds for their intended purpose to resume its activities as soon as possible.
- Common Points of Delay
There are several reasons why claim processing may be delayed. The lack of crucial documents, scope of coverage, inadequate assessment of damages, and disagreement on policies between the parties can also cause delays. Businesses can achieve this by keeping their records organized, responding promptly to requests from insurers, and ensuring they understand the details of their policies.
Although the claim process in business insurance seems to be complex, it is simple and exact. Simply follow the process, and it will help get compensation that replaces the loss.