Filing a Commercial Property Claim - MERLIN
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Filing a
Commercial
Property Claim
The Key to a Full Recovery
MERLIN
LAW GROUP
The Policyholder’s Advocate™When a catastrophic loss occurs, Commercial policies and coverage issues
a business owner’s first impulse tend to be complex. A commercial
property claim entails restoring business
is to do whatever necessary to property to pre-loss conditions while
mitigate the loss and resume maintaining the business during the
operations as quickly as possible. period of restoration. The insured is
faced with the tasks of investigating and
Accepting an insurance company documenting all of the losses, tangible
and not, and becoming familiar with the
adjuster’s opinions or an insurance policies at issue, including
insurance company’s offer of the coverages available, limitations on
settlement in haste and without those coverages, deductibles, conditions
independently investigating precedent, and specific requirements
the damages and reviewing all necessary to make a claim.
insurance policies for available On top of that, time is crucial when
coverage can easily lead to a business is interrupted. Customers are
settlement that is far less than forced to go elsewhere, or they may
the business bargained for. Even determine the purchase is no longer
worse, the resolution may not necessary or desired, creating the
chance that they will not return at all.
allow the business to fully recover The key to a full recovery is maximizing
from the loss. the benefits as quickly as possible before
disputes arise and customers are lost.
If the insured will accept less than full
benefits from the insurance company Ensuring You Receive
to expedite a claim or avoid the work
involved, the insurer has little incentive the Proper Settlement for
to pay claims quickly and in full. In Your Claim
negotiating a settlement, it is important
to remember that the insurance adjuster There are some things you can do to try
works for the insurance company and to maximize the recovery you should
may not necessarily intend to do the receive for your claim.
investigation and research necessary for
your business to receive the full benefits
owed.
MERLIN LAW GROUP> Document the loss. Typical commercial policies provide
the following coverage when a direct
Photograph or film the damage to physical loss occurs to covered business
the structures and contents. If the property:
loss occurred during a catastrophe
or weather event, photograph the >>Property damage, which includes
neighborhood as well. the buildings, fixtures, machines,
furnishings, raw materials, and
Mitigate future losses: Cover broken inventory
windows, patch holes in the roof,
remove standing water, and take steps >>Business income, which generally
to prevent theft or looting. Document pays a business’ profit and continuing
the work and keep receipts and other operating expenses, including payroll,
business operating documents, such as for a specific period
payroll.
>>Extra expense, which covers expenses
Do not dispose of damaged property incurred in mitigating business loss
until your insurer has inspected the or increased costs in continuing the
property or declined to do so. Inform business in the wake of a catastrophe
your insurer, in writing, before
discarding damaged property. >>Additional coverages often added
to standard commercial policies
> Read all of the business’ insurance such as civil authority, off-premises
policies. power failure, ingress/egress, law and
ordinance, pair and set, and debris
Though the commercial property and removal.
business income policies are usually the
best starting points, coverage may also > Learn the difference between
be available under a general liability replacement cost coverage and actual
policy, an errors & omissions policy, cash value coverage.
a commercial auto policy, and/or an
environmental liability policy. Understand how both terms are used
in the policies. The terms will affect
Note all of the coverages purchased, the the amount of benefits owed, your
amount of benefits or policy limits, the obligations under the policies, and the
time deductibles for business income timing of payments.
losses, and the monetary deductibles.> Review your obligations under each loss photographs, receipts, and oral
policy. descriptions. Employees can be valuable
in recalling the contents of a room.
Insurance policies are contracts, and Independently estimate the cost to
most require action by the policyholder replace the contents, including taxes,
before any payment is due. Generally, installation, transportation, and
policyholders are required to comply shipping costs.
with several conditions precedent, such
as completing a proof of loss and sitting For business income: Gather current
for an examination under oath, as well and past income tax returns, payroll,
as providing reasonable access to the and quarterly statements. This will
property and business records so that allow for a comparison between the year
the insurer can adjust the claim. of the loss and past years. If business
increased during the year of the loss
> Document the pre-loss property. in comparison to past years, gather
evidence such as newspaper or trade
This will give you and the insurance articles, invoices, and statements of
company a starting point to begin the employees and/or customers to support
adjustment. and prove it.
For the structures: Document the > Determine the scope of the loss.
number of rooms and all of the
fixtures: flooring, cabinets, counter If the business structures are not a total
tops, windows, window treatments, loss, you will need to determine the
baseboards and trim, lighting, extent of repair or replacement. This
appliances, machinery, etc. Use is a specific calculation necessary to
building plans, pre-loss photographs, obtain an accurate estimate of the costs
receipts, and oral descriptions to of repair and the benefits owed. It will
provide an accurate account of the pre- include, for example, a specific amount
loss property. of flooring, paint, cabinetry, and other
fixtures. In more complex claims, this
For the contents: Prepare a room-by- may also include machinery, the HVAC
room inventory and list everything lost system, and the process to repair smoke
or destroyed. Helpful checklists are or mold damage.
available from policyholder advocates
and many insurers. Again, use pre- Most commercial property policies
MERLIN LAW GROUPprovide for replacement of “like kind not covered by policy benefits, certain
and quality,” not cheaper “equivalent” policyholder advocates such as public
construction. Policyholders should adjusters and plaintiff attorneys work
insist that “like kind and quality” is for a contingency fee, which is a portion
the standard for the scope of loss. of the benefits paid after settlement or
Likewise, if only part of a structure is litigation.
to be repaired or replaced, the repaired
portion should seamlessly blend with Other professionals who already have
the undamaged structure. Although a knowledgeable relationship with the
the language varies with each particular business, such as insurance brokers and
policy, “like” and “similar” quality or risk managers, also know the intricacies
construction should mandate that the of the insurance industry and claims
repair matches the undamaged structure process, and the business may want
and will not diminish the value of the to engage one of them to present the
property or the business. claims to the insurer in a manner that
will keep the business viable while the
Get at least one estimate from a licensed restoration and repairs occur. The
and experienced contractor with no broker or risk manager should be
connection to the insurer. Ensure that familiar with the business’ intent in
required code upgrades, taxes, shipping, purchasing the insurance and generally
and increased costs of materials are be in a position to work with the insurer
accounted for in the estimate. to see that those expectations are met.
Depending on the insured’s situation, However, should the claim not
professional help may be essential. be satisfied to the policyholder’s
Experienced policyholder advocates expectation, it may now become a
can investigate the damage and raise situation that requires legal advice, and
coverage issues with the insurer early it is in the business’ best interest to
in the process so that any disputes can consult with an attorney, especially one
be resolved before substantial expenses with experience in the field of insurance
are incurred and the likelihood of the law.
business’ full recovery is diminished.
Insurance policies may cover services Working with the Insurer
of professionals such as contractors,
architects, engineers, accountants, and
to Settle Your Claims
attorneys if their services are required
An insurance claim is a business
to present the loss to the insurer. If
negotiation, and it must be approachedin an honest, assertive, informed, and Do not feel “rushed” into a quick
organized manner. settlement. Coverage can be a complex
issue; the specific cause of damage
> Request an insurance adjuster who and exceptions to exclusions and
has experience with similar business endorsements can provide coverage
claims and understands the nuances where it is otherwise excluded.
of your business.
If an insurer tells you that something
It will go a long way if the adjuster is not covered, research the issue or
looking at your claim has at least a contact an experienced policyholder
general understanding of your business advocate for a second opinion. Likewise,
and the industry in which it operates. structural damage is not always readily
For example, the adjuster should apparent. If you believe the insurance
understand such things as whether or adjuster did not thoroughly investigate
not your employees need to be on site the damage or if you question the
in order to perform their duties, is adjuster’s opinions on repairs or
your business “seasonal”, and even what the period of restoration, get an
method of accounting you use. independent opinion. If your insurer’s
offer is less than what you believe the
> Document every contact with your business is owed, determine which of
insurer. the insurer’s coverage decisions or
estimates are incorrect and explain your
Keep a log which details the date and position to the insurer in writing. A
time of any telephone call, the person little time spent at the outset of a claim
you spoke to, and the content of the can save a lot of future time, expense,
conversation. Follow up any substantive and litigation.
conversation in writing. Keep copies
of all photographs and written > Set reasonable deadlines for each
communication. phase of the process.
If you are having problems with Meet your deadlines and make it clear
the adjuster assigned to your case, to your insurer that you expect it to
communicate only in writing and meet the deadlines as well. Though your
carbon copy the adjuster’s supervisor. deadlines will not be legally enforceable,
they should encourage the insurance
> Investigate both your coverage and adjuster to diligently work to resolve
loss. your claim.
MERLIN LAW GROUPIf you are having trouble meeting of each particular loss and insurance
deadlines set in an insurance policy, policy. General advice cannot provide
request an extension or tolling meaningful guidance for a particular
agreement from the insurer, and claim. Hundreds of thousands, if not
if one is granted, get it in writing. millions, of dollars are typically at
Additionally, an insurer may agree to stake in commercial claims. Insurance
accept partial or incremental claims. companies are not going to give up
Note that flood policies issued under their profits unless they are reasonably
the National Flood Insurance Program convinced that it is necessary and in
(NFIP) allow for extensions only in their best interests to do so.
limited circumstances; the terms of the
policies cannot be “altered, varied, or To be successful, a commercial claimant
waived other than by the express written must work well with the insurer, if
consent of the Administrator.” possible. Remember, the claims process
is a business negotiation which will
> Never sign a final settlement, probably require a substantial amount
release of liability, or waiver of rights of work to ensure the business receives
without fully understanding the the full benefits owed. Few business
document and the consequences of owners would risk the value of their
signing it. business without conducting substantial
research and strict oversight, and an
insurance claim should be treated no
differently.
If, at anytime, you feel the
insurer is not treating you fairly,
contact your state’s Department
of Insurance or consult a
public adjuster or an attorney
with substantial experience
representing policyholders.
The successful resolution of a
commercial property insurance claim
depends on the facts and circumstancesYou can also read
