Disasters during the past decade – such as flooding in the Midwest, oil spills in the Gulf Coast, and wildfires in California – have cost hundreds of billions of dollars. Insurance will play a vital role in helping your businesses recover from a disaster, if you manage your claims properly by following these guidelines:
- Protect internal conversations. Consulting with your counsel on the nuances of your claim should keep confidential information from becoming public knowledge. However, bear in mind that most states do not protect the confidentiality of communications between and you and your accountant or broker.
- Follow procedural requirements. Your policy requires you to alert your carrier within a reasonable time after a loss and provide a “proof of loss” within a certain period. Seek to extend the proof-of-loss date until after the claim is adjusted.
- Don’t overlook less-obvious coverage. A typical property policy includes coverage for property damage, extra expense, accounts receivable, leasehold interest, rental value, royalties, demolition of buildings or structures, decontamination costs, fire extinguishing expenses, interruption by civil authority, and debris removal.
- Document actual losses. Keep detailed records of all property damage and costs of repairing or replacing damaged property. For Business Interruption claims, preserve historical sales data and document all repairs and other financial hardships resulting from the disaster.
- Don’t short-change your coverage when measuring losses. You might be able to measure your loss based not on what the business would have made if there had been no disaster, but on what it would have made if there had been increased demand for its goods or services after the loss and it had been able to conduct business.
- Work closely with your insurer. Striking the proper balance between legitimate requests for substantiation of a loss and endless demands for more information requires good-faith activity on both sides, as well as an effective working relationship.
- Keep your right to pursue legal action. Many policies require that any suit be filed within one year (sometimes two years) of “inception” of the loss. However, because it’s sometimes unclear which state’s law governs this issue or how a policy is interpreted, don’t assume that the law where the insurer is based or where the loss occurs will apply.
When you file a claim, our risk management professionals would be happy to provide advice. Just contact us by phone or e-mail.