The initial shock of discovering your business has been damaged by fire, vandalism, theft, or natural disaster can be overwhelming. But, what you do during those first few days can make a difference in whether you fully recover under your insurance policies. Here are some tips to making your insurance claim:
- Contact your insurance company as soon as possible. Call your agent, broker or carrier right away. Most policies require prompt notice of any claim or your coverage may be in jeopardy. Do not rely on your agent or broker to notify the carrier for you. Get the appropriate contact information from them and notify the carrier yourself. Your insurer may provide you with forms to document your claim or send an adjuster to the property. Even if you think the claim might not be covered, notify your insurer. There is no harm in giving notice of a claim that turns out not to be covered.
- Contact the police if necessary.If your business loss is due to a crime, contact the police immediately. You should save the number of the police report and a copy.
- Do not throw anything away. Try not to dispose of anything until the adjuster has been there to examine the damage. In some cases, you may have to throw things out, like spoiled food from the fire damage. if you do, take pictures and document what you threw out and why.
- Review your insurance policy.Your policy may have specific steps that you need to take when making a claim.
- Make an insurance claim file. Make a file or folder to keep claim paperwork in. Be sure to file a copy of everything you send to the insurance company and everything they send you. You should also keep notes of important contact names and numbers in this file. Create a timeline of events, recording where you were and what you did on the day of the event, everyone you talked to, when and what was said, every relevant detail since the event. Continue to add to this timeline as your claim is processed. Be prepared to give the insurance company a copy of this timeline and any notes you make.
- Document your claim.Make a list of any damaged areas you want to show the adjuster. It is easy to forget items if you do not make a list. Take photos or video of the damage, and be sure to date and time stamp them. Place copies of your list and any photos or videos (on a flash drive) in your claim file.
- Prepare an inventory.Make a list of everything that was damaged or destroyed and give a copy to your insurance company or adjuster. The insurance company may want this information on a specific form. If you replace any items, keep the receipts and send copies to the adjuster. If you have original documentation from your purchase of the items, send copies to the adjuster as well. Put copies of all of this paperwork in your claim file. The insurer may ask you to include the date items were purchased, so if you do not have receipts, be prepared to scour bank records to find this information.
- Proof of loss.You will be asked to send a signed, sworn proof of loss statement containing the information requested to the insurer or adjuster to investigate the claim. Typically, this must be done within 60 days after the initial request by your insurer. Check the language of your policy to make sure you timely provide this information. You may need to have this statement notarized. If you do not have everything you need yet, send what you have by the deadline with an explanation of the other documents you are trying to obtain and a description of your efforts. Make copies of everything you send for your claim file. Make this statement carefully. For example, if the value of an item you are listing is an estimate, say that and state what the estimate is based on, like ads on the internet, and provide copies. If you make a definitive statement, for example, that the cost of the damaged copier was $3,000, and it turns out you only paid $2,800 for it, the carrier may take the discrepancy as an indication of fraud.
- Prepare for an inspection.Your insurer may want to send an adjuster or an appraiser or both to inspect the damaged property. Be prepared to show this person the damage to the building and any damaged items and turn over copies of any requested paperwork. Be prepared to show proof of ownership for damaged property, such as the title or registration to a car.
- Make temporary repairs if needed.Take reasonable steps to protect your property from further damage, provided it is safe to do so. For instance, if your roof is damaged, cover the hole with something temporary like a tarp to avoid further damage. If immediate repairs to equipment are necessary, save the damaged parts in case the claims adjuster is interested in examining them. Save receipts for what you spend so you can submit them to your insurance company for reimbursement. You have competing duties to allow the insurance company to inspect any damage before making any changes and to avoid allowing further, unnecessary damage, to the property. If you have coverage for loss of income, you also have a duty to get the business up and running again as quickly as possible. You should not ignore the hole in the roof and let rain cause further damage, but you do not want to make permanent repairs before the insurance company has a chance to inspect the damage. Adjusters typically come within a day or two of the insurance company notifying you that they will be sending someone.
- Get at least two Bids for repairs or replacements. Repairs or replacements should be bid competitively in order to provide options and hold down costs. The carrier or the adjuster may make recommendations about who to use for repairs, but you should still vet them. They may not be recommending the best or most cost effective option.
- Business interruption documentation. If your business is forced to close temporarily or relocate, you will want to file a business income and extra expense claim, if you carry this type of coverage. To receive a business income settlement, you must be able to show your business’s net income and continuing normal operating expenses, including payroll, both before and after the event that interrupted your business. Your insurer may also look at your financial records over several years to determine income. In addition to locating and organizing records from before the event, keep detailed records of:
- Ongoing business activity and transactions, if any, while you recover from the event.
- Expenses associated with operating in a temporary location.
- Ongoing expenses that you must pay even if your business is closed, such as utility or advertising costs.
- The recorded statement or interview. Often, your insurance company will require you to make one or more recorded statements. It is advisable to seek legal advice before giving such a statement. Even if your lawyer cannot sit with you while you give the statement, she/he can help you prepare for it. During this statement, you will be asked a series of questions and your answers will be recorded. You will be asked specific information about the event. You will also be asked for specifics about the day to day operations of your business. Use your timeline and your claim file to refresh your memory prior to giving the statement. Ask if you can have those records with you to refer to during the statement.
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