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 property claims?
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 claim.
How should a business proceed if it is unhappy with its insurance company’s proposed resolution?
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 firstname.lastname@example.org.