Making a business insurance claim seems simple enough right? Experience some type of loss or accident, contact your insurance provider to tell them about it, get reimbursed and made it whole again.
Easy peasy!
While in many scenarios it more or less seems that straightforward from a business owner perspective but as the horror stories out there remind us, that’s not always the case.
Here are some of the most common small business insurance claim mistakes that you should avoid:
MISTAKE #1:
NOT KNOWING WHAT BUSINESS INSURANCE COVERAGE YOU HAVE
While practically every small business insurance policy includes general liability insurance, it’s not quite the catch-all that some small business owners may think it is.
Here are examples of some things that may not be covered by your general liability insurance:
Lost revenue caused by business interruption
While you’re likely covered for the damages caused by perils such as a fire, general liability coverage does not cover the lost revenue experienced while your operation is shut down due to the fire.
This is where separate business interruption coverage comes into play. Depending on the policy, this may cover lost revenue as a result of an insured peril.
Business vehicle damage
If you have one or more commercial vehicles for your business, damage to them will not be covered by your general liability coverage. Instead, this would be covered by a separate commercial auto policy.
A loss experienced during uninsured business operations
If your business starts offering a new service that it’s not insured for and a loss or injury is experienced because of it, your general liability coverage won’t cover it.
For example, if a landscaper begins offering snow removal in the winter and they do not inform their insurance company or the new operation, they will not be covered by their contractor insurance in the event their snow removal equipment gets damaged or if they cause damage to a customer’s property. Your insurer may no longer be able to offer you a commercial policy for any of your operations at this point so keeping them informed and updated is essential.
Small business owners like contractors have enough to worry about. Know what you are and are not covered for so you can put some of those fears to rest.
MISTAKE #2:
NOT CONTACTING YOUR INSURANCE COMPANY RIGHT AWAY
Think of an accident or loss experienced by your small business the same as you would for a personal auto accident.
When you’re in a car accident your first call is to emergency services and your next call should be to your insurance company. Most of us know this, but we tend to forget the same is true in other scenarios as well.
The same calls after an auto accident should be made after a loss experienced by your small business.
Don’t bail out the water and clean the damage after a flood before calling your insurance company. Call them first before starting the cleanup. In some cases, your insurance provider may have a response team that can spring into action to not only help make sure the claim is handled properly but may also be able to assist with the recovery efforts themselves.
MISTAKE #3:
NOT PROPERLY DOCUMENTING THE DAMAGE OR EVENT
For much of the same reasons as outlined above, pictures and information should be recorded immediately and thoroughly while your memory is freshest and evidence is most available.
After experiencing any type of loss, make sure to record the exact location, time of day and circumstances surrounding it so you’re capturing as accurate of a picture of the event as possible.
Using a crime scene analogy, if you wait until the next day to start recording witness statements their recall and accuracy may not be as strong compared to moments after the incident. If you wait too long to take pictures and video, some of the visual evidence of the event may be gone forever.
Obtaining accurate and timely information is crucial to a smooth and successful insurance claim.
MISTAKE #4:
ADMITTING FAULT
If someone is injured on your property or during your business activities, saying something like “I am so sorry! This is my fault” may naturally seem like the right and polite thing to do for most people.
While we are certainly advocates for politeness, in these situations it’s best to air on the side of caution. After the proper procedures and investigations have concluded, you can always choose to express your apologies and regret at that time if it does turn out to be your fault.
To protect yourself and your business from a potential frivolous lawsuit, avoid admitting fault. You may think you know how the accident happened but you may not be aware of crucial details that could change things.
Admitting fault too quickly may leave you vulnerable to a lawsuit. Your commercial insurance policy typically covers defence costs.
A small business owner’s first instinct in the event of a loss or injury should be to protect themselves, their business and their employees. Understanding these common insurance claim mistakes and how to avoid making them will go a very long way towards doing just that.
Not all insurance company claims departments are built the same. We consider ours to be one of the best and you can learn more about our insurance claims here.
Erie Mutual Insurance proudly serves the commercial insurance, farm insurance, home insurance and auto insurance needs of members throughout Southern Ontario including Haldimand, Niagara and Hamilton.
Please don’t hesitate to contact us with any questions you may have about this or any other topic related to your insurance.
