You worked hard to build your business from scratch – but any unexpected liability could destroy everything you have. Insurance is your first line of defense against disaster and a safety net for protecting your venture.
Unfortunately, many business owners end up blindsided when their legitimate claims are denied. Unfair denials not only disrupt business operations but can force business owners into prolonged litigation to secure their rightful compensation. Here are three of the most common reasons for unfair denials and legal battles.
Ambiguous policy language
Dense language and fine print can be challenging even for experienced business owners to interpret – and insurers sometimes rely on the ambiguities within the policy to justify denying a claim. For example, terms like “flood damage” or “business interruption” may have specific exclusions that aren’t clearly defined, allowing insurers to argue that the policy doesn’t cover certain damages you’ve suffered.
“Late” reporting
Insurance companies generally have specific deadlines that you have to meet when you’re filing a claim, but in the chaos following an incident, it’s easy to have a minor delay. Insurers can seize on even the smallest technical issue to deny a claim, regardless of its validity. This is particularly problematic after a natural disaster or another complex situation where prompt action just is not feasible.
Disputes over values
When you file a claim, you expect fair compensation based on your policy’s terms and the value of your losses. However, insurance adjusters may undervalue a business’s losses to minimize their payout. This can happen with property damage, business interruption claims or liability claims where the insurer believes the damages are less than what the policyholder claims.
Understanding these common insurance tactics can provide insights and help business owners prepare to take action when they encounter a roadblock with their claims. Litigation sometimes remains the only tool to challenge unfair insurance practices.
