Business owners and executives use insurance to protect company resources, mitigate liability and ensure solvency during operational disruptions. Typically, businesses with insurance policies go for years without ever making a claim, and some organizations never use certain forms of insurance.
Those pursuing compensation through business insurance policies usually expect a straightforward and positive claims experience. Unfortunately, this is not only always the case as policy holders might encounter a denied claim with little to no explanation.
What are some of the tactics insurance company professionals might use to limit the payout on a valid claim brought by a business?
Misunderstanding Available Coverage
In certain situations, insurance professionals can often make errors that can affect the claims process. For example, they might miss alternative coverages or construe coverage limitations too broadly. They may also be slow in responding to claims or in investigating losses or in making coverage decisions. This can cause some people to give up early in the claims process, whether out of frustration or a misperception that the loss is not covered because of the claims professional’s failure to thoroughly or correctly evaluate coverage for the loss.
Attempting To Increase Policyholder Responsibility
Business insurance policies often include specific coverage limitations for different types of coverage. Some apply more broadly than others. During a claim, some insurers may attempt to apply more restrictive provisions too broadly, trying to minimize coverage for the loss. Policyholders unfamiliar with their rights may be vulnerable to such tactics. Importantly, insurers are generally required to view coverage grants broadly in favor of the insured and construe coverage limitations narrowly in favor of coverage. But insurance company’s often cause their claims professionals to view coverages more narrowly and exclusions more broadly, all geared toward minimizing the insurer’s payout on the loss.
Offering Low Settlements
Some claims occur on a rolling basis. Business owners and executives continue submitting documentation for new expenses as they accrue. Other times, they may arrange a settlement with the company where they receive a single, lump-sum payment for the full estimated costs of the covered losses. In either case, insurance professionals may offer lower amounts to the insured, arguing that amounts incurred were unreasonable, “betterments” (i.e., repairs that return the property to a better condition than existed prior to the loss), or excluded or limited by the policy provisions.
Sometimes, an insurer may seek a release in exchange for a slightly better payment, which would require the insured to forgo any further coverage for the loss. In situations where repairs are on-going, such releases can cause an insured to forego coverage that otherwise would have been available, regardless of how many more losses they incur.
Scenarios involving high-value, complex insurance claims often require careful review and outside support. Our team is here to help you get the right assistance and will help navigate an insurance claim successfully, while keeping our focus on your protections.