Business Insurance

Insurance Coverage Analysis for Business: Understanding What Your Policy Covers

By May 10, 2019 No Comments

Within the next ten years, 40% of small businesses will file an insurance claim. For these businesses, deciphering the legalese of their coverage is often confusing.

If you’ve suffered damage and need to determine what your policy covers, thorough coverage analysis is in order. Keep reading to learn what it entails.

Coverage Analysis in a Nutshell

In simplest terms, an insurance coverage analysis involves reviewing your policy with a fine-tooth comb to see which kinds of losses and items are covered in it. Afterward, a claim gets prepared according to what’s available to you. Often, for large claims, businesses choose to hire professionals to handle the entire procedure.

Why is an Analysis Needed?

An initial analysis should take place when damage occurs to a business; it’s the first step. You’re paying for coverage, and you need to know what’s covered, and to what extent. Understanding the scope of your policy lessens the chances of disputes during the claims process.

Another time an analysis takes place is during the process of dealing with a contested claim. Sometimes the wording in a policy requires an expert eye to look it over.

Navigating Your Insurance Policy

An insurance policy is a type of contract which defines the requirements of both participating parties. While going through the claims process and during an analysis, it’s essential to understand the layout of your policy. This way, you can find the information you need.

Standard Policy Format

A standard policy will contain the following sections:

  • Declarations Page
  • Insuring Agreement
  • Covered Property
  • Covered Perils
  • Exclusions
  • Definitions
  • Conditions
  • Endorsements

The covered property, covered perils, and exclusion sections include essential details related to claims.

Often Overlooked Items

A thorough review takes into account your specific situation and finds covered losses besides those directly related to business operations. You’ll want to ensure that all costs get counted. Some items often missed are:

  • Labor Costs
  • Debris Removal Fees
  • Mitigation Fees

Some knowledge of insurance-related regulations is vital for getting as many losses covered as possible.

Calling in the Experts

Sometimes you’ll need an expert to substantiate a claim. For example:

  • A geologist for an environmental-based claim.
  • Contacting an advertising expert for losses due to marketing campaigns.
  • A healthcare industry expert called in for a medical device case.

In these situations, consider utilizing a witnessing service. We have experts from a variety of fields that they work with.

Should You File a Claim?

It seems natural to want to file a claim for business damages. But, there are certain situations when you might not want to. Things like how many claims you’ve already filed in the past and your deductible amounts are deciding factors.

Reasons for filing include:

  • The damage is so extensive that your business cannot survive without filing a claim.
  • You need to file a liability claim.
  • You have a low deductible.

On the other hand, here are some reasons for not filing:

  • Your deductible is higher than the amount needed to cover damages.
  • Filing a claim will increase your insurance premiums.
  • You don’t want a particular claim on your policyholder’s record.
  • It’s water damage. Some insurance providers will drop you after filing a water damage claim because they can lead to mold issues.
  • The damages are due to maintenance negligence; these types usually get rejected.

Insurance companies each have different policyholder rules. Know what yours are so you can make an educated decision on whether to make a claim or not.

What’s the Bottom Line?

Once you’ve weighed the options and have decided to pursue a business insurance claim, make sure that:

  1. You know precisely what your policy covers.
  2. How to take the right steps to recover everything you’re entitled to.

Consider enlisting the help of a professional if the process seems too daunting. Filing a business claim is something that you want to get right.

Need advice on a coverage analysis? Contact us, we’re here to help.

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