Getting the right insurance to cover your business is crucial. It protects you if you ever get hit by a fire or a flood, so you can pay for the damage and recoup the income you lost. It also helps you in situations where the business is shut down due to cyber-attacks or other unexpected events.
But it’s important that you don’t get the wrong idea about business insurance because it’s not a magic wand that solves all of your problems. In some cases, your claim will be denied and you will be left to pick up the bill. This puts you in a seriously difficult position and in the wake of a big disaster, it could mean the end of your business. It’s important that you recognize the reasons why a claim is likely to be denied so you can take steps to stop it from happening to you. These are the biggest reasons why a business insurance claim will be rejected.
Misunderstanding Your Policy
If you and your insurance provider both have a different idea of what your policy covers, this leads to problems. This is especially common with loss of income insurance because these situations are not always clear cut. If you are concerned, you should work with a public adjuster who can help you file and negotiate your claim. An adjuster who has a lot of experience with loss of income claims can help you get a larger settlement and make sure that your business is protected.
It’s also incredibly important that you read your policy in full before signing it, so you know exactly what you are covered for. Take a look over the claims process too, so you know how long you have to file a claim after the event and what documents you need to provide. Any mistakes during the process will slow things down and could lead to the claim being denied.
Undervaluing the Building
Finding ways to bring the cost of your policy down and improve cash flow in the business is important. But don’t make the mistake of undervaluing your building like many businesses do. They assume that if they estimate low, their policy will cost less, and they’re right. But when they come to make a claim, they can only claim up to the value that they provided. So, if you undervalue your building by 50%, your claim will also be 50% lower. Although you save money upfront, your insurance doesn’t actually protect you. In some cases, a severe mistake with the valuation could lead to the claim being denied altogether.
Failing to Update Details
Your insurance provider needs to know exactly how much the building is worth and what contents need to be covered. If this information isn’t accurate, your policy could be invalidated. This usually happens when businesses upgrade their computers or buy expensive new equipment. Suddenly, the value of their contents has increased but their policy price doesn’t reflect that. When you try to make a claim, the insurance company will find out. So, always notify them of any changes, no matter how small, just in case.
Avoid these common mistakes and you can make sure that your business insurance offers you the protection you need.