How to Avoid Common Problems When Filing a Business Insurance Claim

Business Insurance is literally a future promise to pay if your business suffers a financial loss or hardship due to a cause covered by the policy you’ve purchased.

While the saying “the customer is always right” may hold true for most industries, it does not hold true for insurance, and for good reason! Companies who provide insurance have two responsibilities to their customers. The first is to provide prompt payment for all valid claims received, and the second is to deny coverage for fraudulent claims.

Understand the Laws and Regulations

Insurance is highly regulated by federal and state governments. The insurance laws in place require companies to operate within a certain framework, and they penalize those who don’t with fines or other penalties. The first step to avoiding common problems associated with an insurance claim is taking the time to understand the laws and regulations as they apply to you. For instance, if your insurance company violates the law and denies your claim you can pursue legal action. Likewise, if you know the denial is legitimate you can save yourself the expense and hassle of trying to fight it.

Filing a Claim

Filing a claim is required before you can receive payment from your small business insurance company. The first thing you should do in the event a financial loss occurs is take good notes. Accurately documenting the incident can do more for the outcome of a claim than anything else. Here are a few other tips to help make the process of filing a claim smooth, and problem free.

  • Submitting a Claim Form – A claim form is a document that gives the insurance company all the necessary information they need to process or deny a claim. Take care to fill this form out as accurately, and as detailed as you possibly can. Leaving out important information can cause a delay in benefits, or worse a denial of coverage. Read the fine print thoroughly, claims have to be made within a certain amount of time after a financial loss occurs; if too much time passes the insurance company can deny the claim.

 

  • Supporting Documents File – Maintaining an up-to-date file of supporting documents and information will help avoid problems associated with filing an insurance claim. A few examples of documents and information you’ll need to keep include: business receipts, inventory lists, employee time cards (for workers comp claims), building lease agreements, and more. If and when a financial loss occurs you’ll have all the information you need in one spot to file a claim with your insurance company. For safety reasons it would be a good idea to make copies of all the documents, and store them in two separate locations.

 

  • Follow-Up with the Insurance Company – Being proactive about your insurance claim will help reduce the chance of possible problems. At the very least, if a problem does arise, you’ll be able to deal with it quickly. After you file your claim wait no more than a week before your first follow-up call. Good insurance companies will make every effort to contact and update you throughout the process, but a little self-initiative can prevent miscommunication from causing problems with your claim.

Full Disclosure and Contestability of Claims

Every insurance policy contains language that allows the insurer to deny, or contest a claim if you (the applicant) didn’t disclose something that would have been used to determine whether or not you were eligible for coverage. For this reason it’s of the utmost importance to disclose everything before you sign the dotted line of an insurance contract.

Preventing Insurance Fraud

After filing a claim it can feel like an eternity before you receive payment, especially if you need the money. Part of the reason an insurer won’t payout a claim immediately is because of insurance fraud. Insurance companies will spend time investigating every claim in order to avoid paying on a fraudulent claim.  Proving with a paper trail what happened, who it happened to, and how much it cost will remove the suspicion of fraud.

Conclusion

There’s no doubt that filing a business insurance claim can be frustrating. Keeping your records up to date and taking the time to understand how government regulations and laws apply to you are two ways you can avoid common problems with your claim.

The contents of this article and the linked materials do not offer legal, business, or insurance advice related to the needs of any specific individual business. Please consult your attorney, insurance agent or other professional advisor to obtain appropriate legal or other expert advice.

 

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Gary

CEO at 3Bug Media
Gary Shouldis is the founder of 3Bug Media, a web marketing company that helps businesses create 360 Marketing Strategies to dominate their market. His blog is read by over 20 thousand small business owners a month and has been featured in the N.Y. Times Small Business, Business Insider and Yahoo Small Business.