Filing an insurance claim doesn’t seem difficult until it gets rejected. Some people assume that cooperating with an old and established insurance company will save them the trouble of denied insurance claims. However, this is not always the case.
There are many reasons why your insurance claim can be rejected. You could’ve reported the claim too late or not provided all the supporting documentation. Another frequent cause of rejection is underinsurance.
What is underinsurance?
Many people believe that underinsuring their business will cut insurance costs. That is never the case. Insurance might seem like an unnecessary expense to you. Will you file a claim and use your insurance? In a best-case scenario, you hope you never have to, but should you have to, being inadequately insured will not cover the damage.
If your business is underinsured, you will need to pay the difference out of pocket. In the end, you will end up paying more than you would have if you had insured for the right value.
The question is: how do you insure for the right value? There are several steps you can take that will help you do that.
Find an experienced broker
This is the first step you should take when buying insurance. If your broker is an experienced professional, they will aid in determining the value of your business. Not without your help, of course.
If there is anything you are unsure about, don’t hesitate to ask your broker or agent. After all, it is their job to help you.
Tell your insurer about all the changes you make
Change is constant. It is nearly impossible to keep up with the fluctuations in the market. One thing you can do to keep the value of your business accurate is to keep your insurer up to date with any changes to your business.
If you’re planning a big purchase or a remodel, your insurer should know about it. That way, they can make appropriate changes to your policy if needed. In a worst-case scenario, you could be facing serious underinsurance issues. This could very well impact your business financial flow.
Consider everything that falls under your business
Let’s consider property for a second. You can’t just insure the main building and hope that outside buildings will fall under the insurance. You must include the exterior buildings, parking lots, fencing, and business assets.
Be upfront with your insurer
Be honest with your insurer and don’t hide any assets from them. If damage is ever done to an asset that was not insured, you will end up footing the bill.
So, as you can see, it is essential to avoid being underinsured. As tempting as it is to buy the cheapest insurance for your business, always consider the cost you would have to endure if your claim was rejected.
Other Reasons Why Might Your Claim Be Rejected?
In addition to underinsurance, there are other reasons why your claim can get rejected. You need to be aware of these, as the first step in preventing rejection is knowing the reasons why it might happen. If you are not aware of them, it is hard to take precautions. So, in a couple of short lines, we are going to explain what they are. The first one is the most apparent, and this is the reason why people often oversee it. We’re talking about incorrect information.
- Incorrect information – your claim can be severely affected by incorrect information. You need to be very careful when giving your statement, as it can gravely backfire on you. In case you do not provide a correct answer about the way something got damaged, your claim can be in jeopardy. Wrong information won’t pass with insurance companies. They shouldn’t! You need to be aware of this and only to file a claim when you have a solid ground for it. Incorrect information won’t bring you any good, and you shouldn’t even try to use them.
- Lack of due care – in the end, all that matters is that you care about your belongings. If you leave important documents or money in a visible place and get stolen, it’s your fault. If your car gets stolen because you left keys inside, there’s no one to blame but you. If you lose essential documents on the bus, and someone takes them, insurance won’t cover the costs as if they were stolen. The policy tends to be very clear on what it covers. It won’t cover for neglect on the parties involved, and you shouldn’t count on it. If this is the situation on your hands, the claim is going to be rejected. Insurance is there to protect you, not to cover up your blunders. You shouldn’t even file a claim if this is what happened. People from companies such as contractorsliability.com lookout for your interests, but they also protect their own. Don’t try to fool anyone.
- False Statement – you need to be honest in your answers and loyal to the events that happened. If you don’t answer truthfully to all the questions asked, you might find yourself in trouble. The insurance company needs to know about all medical conditions you might have or have and about legal issues you encountered in the past, among all other things. If you remain silent on some matters with the insurance companies, it could come back and backfire on you. Being honest and truthful can only serve your interests.
Of course, if the insurance company claims that there’s no ground for your claim, you can complain. This is your right, and you should execute it, but only if there’s legal ground and if you cover all the issues we mentioned above. If you have a true claim, it won’t get rejected by any means. So, it is up to you to do the right thing and file one, only in the case when it holds ground.