Business Insurance Claims: Where to Begin

You may think that your business insurance will go unused, but according to a study done by The Hartford, 40% of small businesses will submit an insurance claim. 4 out of 10 businesses will take advantage of their insurance. So if you’re wondering how to file an insurance claim with your commercial insurance company, we’re here to help.

What Does the Claims Process Look Like? 

Depending on the type of claim, the basic process includes these steps:

1. Gather evidence + file a police report (if necessary) 
2. Contact your insurance agent + report your claim
3. Work with an insurance adjuster to assess the damage
4. Get estimates for repairs/replacement
5. Get the work completed
6. Settle the claim with your insurance

Insurance claims that are filed to commercial property, general liability, workers' compensation, etc. are all going to be different. However, the general process is typically similar. Let’s look at these a little deeper. 

Gather Evidence + File a Police Report

As a business owner, whether you’re filing a claim for a damaged vehicle or damaged property, make sure you take numerous photos of the damage. A cop called to the scene and an insurance adjuster will likely do the same. Get the names and contact info of anyone involved (or who was a witness). You may also need to call the police and file a report if involved in an auto accident or if your business is the subject of burglary or theft. 

Contact Your Insurance Agent + Report Your Claim

The next step is to contact your insurance agent and follow the steps to report your claim. Some insurance agents will direct you to submit it online versus over the phone. To file the claim with your insurance company, you’ll likely need to provide the following information:

• Your contact information and the information for anyone involved
• Your policy information
• The type of incident you’re filing a claim for (i.e. commercial auto, commercial property insurance, business interruption, general liability, workers’ compensation, etc.)
• Information about the incident (i.e. when and where it occurred)
• A description (with photos whenever possible) of the damage and/or customer injury

The type of claim will dictate the information necessary, so be sure to check with your agent to determine if anything else is needed. 

Work with an Insurance Adjuster to Assess the Damage

Within 24–48 hours of submitting a claim, your business insurance provider should assign an adjuster to your case. They’ll likely come assess the damage, take some photos, and ask questions. Their job is to assess your liability (if any) and what will be covered by the policy. You’ll likely need to complete a proof of loss form to provide them, as well as any other evidence that you collected.

Get Estimates for Repairs/Replacement

At this point, you can begin to get estimates for the repairs to your building (damage to your car, etc.). Most insurance companies recommend obtaining at least two quotes for the repair costs. If they’re unhappy with the quotes you’re receiving, they may request some estimates of their own. In some cases, you’ll have to pay for the work upfront and be reimbursed by the insurance company. After you receive the go-ahead from your insurance company to get the work completed, you can move forward with the repairs.

Settle the Claim with Your Insurance

In most cases, the contractors or mechanics that complete the repairs will directly bill your insurance company. If they don’t, you must submit an invoice and receipt to the insurance company to get reimbursed for the business insurance claims. 

Contact Your Attorney

If a customer was injured on your property, you’ll need to file a liability claim. We recommend you immediately notify your attorney and apprise them of the situation. These types of business claims can snowball quickly and you can end up in court. 

How Long Does It Take to Process a Claim?

The time it takes to process a claim depends on numerous factors, including the complexity of the case. A detailed investigation into the event can significantly stall claims processing. It also depends on the state your business is located in. In Texas, an insurer is allowed 15 days to acknowledge a claim and are allowed up to 45 days to cover or deny a claim. North Carolina insurers have 30 days to acknowledge a claim and 10 days to pay it if it’s covered. Most insurers process a claim within 30 days of receiving it. The process can take longer if your claim is initially denied.

Liability claims are slow-moving, take time, and often end up in court. Business owners and office managers often intuitively know this, and it’s human nature to put off unpleasant tasks, or things that hold the promise of taking a long time.

What Happens If Your Claim Is Denied?

Unfortunately, an insurance company can deny a claim for a variety of reasons. They may claim that the incident isn’t covered by your insurance policies, that you waited too long to file the insurance claim, or they suspect fraud. If you believe their judgment to be wrong, there a few things small business owners can do:

• You can write a “response letter” explaining why you think they should’ve covered the claim.
• Contact a state insurance regulator to help you through the process and determine if you should fight the claim.
• The last option is to hire an attorney to fight the claim. This can be costly, so it’s only recommended as a last resort.

Other Tips For Filing Business Insurance Claims

Here are some other tips and tricks we’ve learned throughout the years that can help make the claims process smooth.

• Make sure you keep up-to-date inventory and carefully record information about your business equipment. We suggest taking a time-stamped video and/or photos at least once a quarter. Property insurance claims are much easier to process if you keep detailed records.
• If you have video cameras installed in your business, make sure you have digital access in case they’re damaged in a fire. 
• File a claim as soon as you possibly can. The longer you wait, the more you risk not having your claims paid.
• Your insurance company may not cover debris removal. 
• Make sure that your insurance company doesn’t exclude coverage for flooding. If they do, and you’re in a flood zone, consider purchasing flood insurance. 
• Before a disaster happens, sit down with a contractor and determine how much it would cost to completely rebuild your business. This can help you determine the level of coverage you need so you don’t exceed the limits of your insurance policy. 

NOTE: Because most small business owners can’t afford to wait 30+ days for a claim to be approved or denied, we suggest investing in business interruption coverage. If your business property is damaged or you can’t otherwise run your business, this insurance coverage can help cover payroll, taxes, rent, and other operating expenses until you’re up and running.