Filing a business insurance claim is the first step to recovering from a loss. Small businesses are especially vulnerable to temporary shutdowns, and unless they successfully recoup the costs of recovery, they’re at risk of closing for good. Loss and remediation costs caused by a fire or flood are usually covered by business insurance policies. However, before you receive any funds from the insurer, you have to make sure your claim is in order.
These are the steps you’ll need to take once you’ve informed your insurer of the loss.
Step 1: Decide If You Need Help
How big was the loss? If the damage was minor and you’re hoping to reopen quickly, you can probably go through the claim process independently. However, if the business underwent a total or near-total loss, and you expect to be closed for an extended period of time, it may be worth getting help from an insurance lawyer.
Insurance lawyers do all of the things that an insurance claims adjuster can do, in addition to bringing legal expertise to the table and the ability to handle disputes if the claims process doesn’t go well. For clarification, all claims are handled by an insurance claims adjuster who works for the insurer. You may choose to hire a lawyer or public adjuster who puts your interests first.
Step 2: Record the Damages
A record of the damages will be invaluable when you’re negotiating with the insurance adjuster. It will fall on the business owner to demonstrate their losses to the insurer. You can do this by taking photos or even video of damaged structures and contents, equipment, and inventory. You can also take more detailed notes.
It’s important to have this primary evidence in case you make any preliminary repairs or, as you’ll see in step 3, make changes to mitigate future damages.
Step 3: Mitigate the Damages
Another responsibility business owners have is to mitigate any further damages. Some commercial insurance policies may not cover subsequent damages after the initial loss, so it’s important to make any necessary temporary repairs; board up windows; lock and secure the premises; and make sure surviving contents, inventory, or equipment are safe, etc.
Talk to the adjuster assigned to your file before you do anything to make sure they aren’t already planning to do it themselves. If they are not, keep receipts and document the work as you go. You may be able to receive coverage for the cost of taking those measures, as long as they do not exceed the potential loss.
Step 4: Calculate How Much You’re Losing
Business interruption insurance is a very helpful thing to have when you can’t operate. This type of coverage replaces lost business income: net profit before taxes plus continuing operating expenses, such as payroll.
You may need accounting help to prove the loss of business income covered by business interruption insurance.
Step 5: Close the Claim
Don’t feel pressured to accept a sub-optimal claim just to speed up the process. Sufficient compensation can mean the difference between reopening your business and not. If you’re not satisfied with how much you’ve been offered, talk to an insurance lawyer or insurance claims adjuster.
A successful business claim can make a major difference in getting your business back up and running.