Insurance is a valuable asset that can protect your business from winter storms losses. If the recent winter storms have damaged your commercial property or interrupted your business, it is essential that you carefully consider these practical steps to help maximize any potential insurance coverage claim.
1. Locate your insurance policies.
Search for all potentially applicable policies, including standard commercial business insurance policies providing first-party property coverage. If your insurance policies have been destroyed or lost, there are many ways to identify your policies and their terms. Start by contacting your agent.
2. Review your insurance policies for applicable coverages and limitations.
Once located, carefully review your policies to ascertain what coverage may respond to your loss. Applicable categories of coverage may include property damage, business interruption, loss adjustment expenses, extra expense, accounts receivable, leasehold interest, rental value, demolition of buildings or structures, and debris removal.
Identify and review any potential limitations on coverage, such as exclusions, deductibles, or limits. If your insurer asserts that a policy exclusion bars coverage, you should not assume that an insurer’s defenses will necessarily defeat coverage, because the question of whether an exclusion bars coverage will depend in part on the wording of the exclusion and the applicable state’s law.
3. Provide written notice of your loss to your insurance company.
Provide written notice of the loss to your insurer using the address listed in the policy; your insurance agent or broker may be able to help you provide proper notice. Most insurance policies require that an insured notify its insurance company “as soon as possible” or “as soon as practicable” after a loss or other insured event. The consequences of failure to give prompt notice differ, depending on the type of policy and the jurisdiction, but they may be severe.
4. Document the extent of your property damage, loss, and expenses.
To support and expedite payment of your claim: a) capture visual evidence of the property damage, i.e. photographs; b) prepare an inventory of damaged or lost property; c) determine what property can be repaired and what cannot be repaired; d) determine the “salvage” value, if any, of property that cannot be repaired; e) identify quantities, costs, and values of damaged or lost property (consider replacement cost versus actual cash value of lost or damaged property); document the amount of lost revenue; and, f) keep receipts for all expenses incurred to protect or repair your property and for any additional or extra expenses. For more complex cases, public adjusters and forensic accountants may be needed to assist in documenting your business’s losses.
5. Submit proofs of loss and comply with the examination under oath requests.
Most property insurance policies require an insured to provide a “proof of loss” within a relatively short time — often within 60 days after the loss “incepts” or within 30 or 60 days after the insurance company requests a proof of loss. If you cannot timely comply with this requirement, seek an extension in writing from your insurer.
6. Be careful what you say within your company and to insurers, brokers, and third-parties.
Conversations solely between non-attorneys in your company regarding the claim may not be protected from disclosure in any litigation. Accordingly, it is important that extreme care be exercised when corresponding internally regarding a claim. Additionally, communications with an insurance company, agent, or broker may not be confidential. If your claim proceeds to litigation, it may be possible for your insurer to use such communications to support its position in litigation.
7. Request partial or advance payments from your insurance company as needed.
You may be entitled to receive partial or advance payments from your insurer, but such payments will be deducted from the final settlement of the claim.
8. Carefully review and keep a copy of all communications with your insurance company, agent, or broker.
Review checks and written communications from your insurance company to determine if they contain language requiring you to release claims against your insurer. Be particularly wary of notations on checks, such as “full payment.” If such language appears, and you have any doubts about whether the insurer has fulfilled its obligations to you, discuss this matter with your insurer, agent, or broker.
9. Seek legal advice as appropriate.
Understanding insurance and making a claim can be complex and you may need to seek legal advice to adequately protect and maximize any potential recovery. An attorney may be needed to help you understand your coverages and to help navigate thorny coverage issues that may arise with your insurer.
10. Take legal action, if necessary.
If your insurer denies your claim or appears to be unreasonably delaying payment, then you may need to consider taking legal action. Both your insurance policies and state law may set a time period, in some instances as short as one year, within which the parties must take judicial action to enforce legal rights or else be thereafter barred from enforcing them. Make sure you take appropriate timely action or you may forfeit your claim.
Jared Zola and Kenneth Berline Trotter are attorneys with Dickstein Shapiro LLP and devote a significant portion of their practice to the representation of policyholders in complex insurance disputes with their insurance companies. Reach Zola at zolaj@dicksteinshapiro.com and Trotter at trotterk@dicksteinshapiro.com.
