Disasters, both natural and man-made,
can arise anyplace, anytime. That is
why it is so important to have adequate commercial property coverage in
place and a plan of attack should an unfortunate event transpire.
“As a first step, have a plan in place
ahead of time to deal with various situations in the event of a catastrophic loss,”
says Henry Emrich, partner at Secrest
Wardle. “Also, have a specific person(s) in
your company familiar with the plan and
charged with the responsibility for dealing
with damage or loss so that they can coordinate activities needed to get the business
back up and running again.”
Smart Business spoke with Emrich
about commercial property claims, the
importance of thorough documentation
and what guidelines should be followed.
How should a company go about making sure
it is adequately covered for commercial
I would encourage a company to inventory its assets on an annual basis. This
should include reviewing the values at
which properties are carried on the books
as well as appraising their market value.
These values should then be communicated to the insurance agent so that any coverages can be updated accordingly.
Current and accurate valuation of insured
properties is critical as commercial policies often contain provisions that can
negatively impact an insurance claim.
Maintaining copies of any valuations
and/or any documents supporting the
same is also a must.
In the event of a claim, why is it so important
to provide thorough documentation?
First, the policy likely requires that such
documentation be produced as a condition
to any consideration of the claim by the
insurer. Second, the insurer won’t pay you
what you believe your property is worth
unless you provide proper documentation
supporting your valuation of the loss. To
the extent that proper and current documentation exists and is easily accessible
and understood by the insurance company, the more likely it is that your claim will be
promptly adjusted and paid.
How can a company expedite the process of
getting its operations up and running again?
The first step in the event of a loss that
affects the operation of the business would
be to immediately contact the agent and
advise them of the loss and the need for
immediate mitigation efforts. Advise the
agent of the impact on your business’s operation and your need to immediately get the
business back on track. Most insurance
companies have access to a whole range of
providers who can provide you with the
kind of help you need to deal with any kind
of loss and loss mitigation efforts. Because
the policy of insurance places certain
responsibilities on the insured at the time of
the loss, the sooner this notice is given, the
sooner any investigation will be completed
so the company can move toward getting
things up and running again.
What guidelines should be followed in order
to minimize any problems with the claim?
Know what the policy requires from you
in the event of loss and be certain these requirements are followed. The first
requirement after a loss is to provide
prompt notice of the loss to the agent.
Following up oral communications to the
agent or insurer with written communications is recommended. Designate one person who has sufficient knowledge and
experience with the business operation
and the applicable insurance coverages,
policies and procedure to handle the claim.
In connection with this, be certain that
when the actual claim is submitted that it
be as accurate as possible and thoroughly
supported with accurate documentation.
Don’t try to inflate or overstate the claim,
as that is the quickest way to derail prompt
adjustment and payment of the claim.
The policy may require a great deal of
information to be submitted that you may
not think is appropriate. However, the
policy is often quite broad in what the
insured can be required to provide in the
event of a loss and compliance with any
policy requirement in this regard is typically viewed as a condition precedent to the
insurer’s liability. Thus, providing whatever
is requested by the insurer as well as any
other supportive documentation is the best
way to minimize any problems with the
How should a business proceed if it is unhappy with its insurance company’s proposed
If you haven’t already retained an independent commercial adjuster or other professional with sufficient knowledge to
value your loss, you might want to do so.
Additionally, the policy often provides for
an appraisal in the event of a dispute over
the amount of the claim. This would typically require the insured and the company
to retain an appraiser to evaluate the loss,
and if they are unable to agree on the
amount, obtain an umpire to make a final
decision on the amount being claimed.
Retaining counsel with experience in handling insurance matters to file a lawsuit is
also recommended particularly if your resolution is not acceptable.
HENRY EMRICH is a partner at Secrest Wardle. Reach him at (616) 285-0143 or [email protected].