7 Mistakes You Need to Avoid When Filing Insurance Claims

Last Updated on March 8, 2022

As a business owner, you can easily make mistakes when filing insurance claims. These mistakes can have far-reaching effects such as delayed payment or a claim denial.

Here are some common mistakes business owners make when filing claims, you should avoid.

Read on and learn more:

1. Failure to Contact Your Insurer Immediately

One common mistake is failing to notify your insurer immediately after a loss or an accident has occurred.

Be sure to contact your insurer immediately after the incident happens. This is important for two things. First, the evidence is fresh and so the claims are easier to adjust – witnesses’ memories and physical evidence fade over time.

Secondly, most insurance companies expect you to notify them of an incident immediately. Commercial property policies require customers to notify them of any damage or loss promptly. Failure to report a loss or claim on time can make your insurer refuse payment.

You can also notify your insurance agent or broker about the loss or claim, who will then forward that information to your insurer.

2.  Disposing of the Damaged Property

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Some people make the mistake of throwing away the property that has been damaged. You should avoid doing this. You must leave the premises as it was until it is inspected by an adjuster.

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If you’ve insured your property under auto physical or commercial property insurance, you’re required to protect the property from further damage.

For instance, if a windstorm destroys your roof, you’re obligated to protect the property from further damage by other perils such as rain by covering the hole with a tarp.

3. Poor Documentation

Poor documentation on your part can delay a claim settlement. Keep a record of any communication between you and your insurer. Record the date, time, and content of the verbal communication.

For ease of accessing the documents, keep them in a separate file. When sending documents to your insurer, be sure to retain a copy of each file you mail. Also, don’t forget to record the date when you mailed the documents.

If you speak with an insurance company employee or a claims representative on the phone, retain a summary of the conversation and send it to that person in a letter or email.

If a loss or an accident occurs, take photos of the scene, if possible. Present the photos to your insurer when filing a claim. The pictures will make it easier to verify your documentation of the events and the damage.

4. Not Cooperating with Your Insurer

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Failing to cooperate with your insurer can also delay your claim settlement. For your insurer to settle your claim as expected, they need your cooperation. Failure to comply with your insurer’s request for related information might give them the grounds to deny your claim.

Most business insurance providers give written instructions on the procedures that need to be followed if a loss or an accident occurs. Be sure to review these instructions before filing a claim.

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You must also check the loss conditions in your policy. These involve the obligations you must meet under your insurance policy for a claim or loss to be settled.

Many policies require you to cooperate with your insurer in the investigation as well as the settlement of your claim. You’ll need to cooperate in your defense when it comes to liability policies.

5. Failure to Notify the Police

You can also violate the terms of your policy for not calling the police. Many commercial property policies require you to notify the police if a law has been violated.

For instance, since vandalism is not allowed by law, you must contact the authority before you file a claim. The standard business auto policy requires you to notify the authority if a covered vehicle has been stolen or damaged.

Even if you’re not obligated by your policy, you should contact the police following an auto accident. You may be obligated by state laws to notify the police if the accident has caused property damage exceeding a certain dollar amount or if someone is injured or killed.

A police report is important as it will verify the facts related to the loss. It can also help speed up your claim settlement.

6. Admitting You Were at Fault

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It’s not advisable to admit liability in a case where a person is injured or property destroyed. And there are good reasons for this. One of them is that the cause of the accident may be different from what you initially thought. It might have involved other factors that were not apparent when the accident occurred.

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Due to the nature of the experience and the mental trauma following it, it can be difficult to recall what has really happened. Often a CCTV footage paints the truest picture than your admission of guilt. Admitting your guilt without legal counsel can not only hinder the claims process for car insurance but it can easily be used against you. You may face severe legal repercussions for your hastily-made statement.

Always remember that the law doesn’t need you to admit your guilt. However, any voluntary admission of guilt to anyone present at the scene may be used against you in a court of law.

A lot of insurance companies specifically ask their customers not to admit their faults and have specific clauses in the contract that renders the policy invalid if they do.

7. Not Reporting Small Incidents

Sometimes a small incident that seems perfectly “fixable” at the time can come back to haunt you. You may be tempted not to report minor property damages or a bump with another car. However, lawsuits can stem from these seemingly-trivial incidents and if you do not report these occurrences to your insurance company they are usually not covered.

This is a common occurrence following minor road accidents. Often people involved agree to a cash compensation right there on the spot. However, even with the payout, there is no stopping the victim from filing a lawsuit for injuries.