Dealing with property damage after a natural disaster event, theft, and/or vandalism can be frustrating for anyone – especially business owners. In these situations, it’s not uncommon for commercial property owners to want to resume business operations as soon as possible. However, for a property damage insurance claim to be successful, certain actions must be avoided early on to steer clear of a potential claim denial. One of these actions is beginning the repair process before even filing a claim for property damage.
Can You File an Insurance Claim After Repairs Are Made?
In short: yes and no. The insurance claims process has many different specifications that must be abided by to allow for proper processing. This includes not making permanent repairs before even taking the time to file a claim for property damage. Although commercial property owners must take reasonable steps to prevent further damage to the property, they must first thoroughly document the damage and then file an insurance claim before jumping into making repairs. This is because the policyholder’s insurance company will need to review proof of all damage resulting from a covered incident. Failing to thoroughly document the damage can result in a drastically lower claim payment or a complete denial of the claim. Taking numerous videos and photos of the damaged structure, equipment, goods, and utilities comprising the business ultimately helps policyholders ensure their claims are processed as accurately as possible in order to receive the full available coverage. Additionally, all communication with the insurer should be well documented and retained by the insured – including specific notes, dates, and times of any inspections, as well as all emails or letters sent by the insurance company. Having all this information on hand can help to hold the insurer accountable under the terms of the policy. It also helps to serve policyholders should a coverage dispute with the insurer arise, and to help an insurance coverage attorney more thoroughly understand your situation should legal representation be needed.
In addition to avoiding making any permanent repairs, policyholders must not throw out any damaged goods before an unbiased adjuster has inspected the property. Physical evidence is one of the most essential components of an insurance claim. Retaining every damaged item can help prove the extent of the loss and will serve as evidence of the impact the event had on the commercial property, which can affect an adjuster’s findings.
Once the damage has been well-documented and turned over to the insurer after a claim has been filed, temporary repairs can be made while the claim is being processed.
Temporary Repairs Can Include:
- Covering openings in the roof or windows with a tarp to prevent further damage
- Removing trees around an affected area
- Boarding up windows and doors
- Drying out water-damaged items or structures
- Removing water from the interior of the property
- Restoring utility services
While temporary repairs can be made and will likely have little to no effect on the outcome of the claim, permanent repairs should be avoided – such as roof replacement or asphalt patching – until after an adjuster has inspected the affected property. The adjuster must be able to see the damage to determine its cause, the value of the claim, and the proper payment to the insured. If any repairs are made, the property owner should save all receipts and submit them to the insurance provider for reimbursement.
While thoroughly documenting damage, correspondence, and repairs increases the likelihood that claimants will have their claims processed fairly and efficiently, unfortunately this still does not entirely ensure the insurance company will act in good faith. Because of this, property owners need to obtain legal counsel to protect their interests from insurance providers who may take advantage of a traumatic situation.
Policyholders Have a Duty to Preserve Evidence in an Insurance Claim
Claims are easier to adjust when events have just occurred and the evidence is fresh. One of the most critical pieces of evidence in proving a commercial property damage claim is the building itself; and failing to preserve evidence relevant to the damages can provide an insurance company a potential defense to not honoring the claim. If a property owner, insurer, or other party destroys or fails to preserve material evidence – even if unintentionally – there can be a wide range of consequences.
As soon as a potential claim is identified, the policyholder is under a duty to preserve evidence he or she knows or reasonably should know is relevant to the claim. Business owners must ensure all evidence is preserved as soon as it comes to their attention, including interior goods damaged on the day of the incident or thereafter. Contacting a security provider is especially important to remember since many video surveillance systems automatically delete the footage at set intervals. It is also very important to make sure to properly document everything preserved. In the event inventory must be disposed of due to health and safety concerns, or building repairs must be completed to mitigate damages, a policyholder must maintain photographs, receipts, and a clear record of what has been disposed of or changed.
The physical evidence of the property itself often serves as the most objective and compelling indicator of the underlying facts in an insurance case. Most property owners don’t think they are destroying evidence by performing repairs after damage is sustained. For an owner, the building is often a place of business, and repairs are necessary to get back to business and to ensure a quality appearance. But keep in mind that moving forward with repairs without properly documenting and preserving the damages could impact the value of a filed insurance claim.
Other Common Reasons Commercial Property Damage Insurance Claims Are Denied
After a disaster such as a fire, major plumbing leak, or windstorm occurs to a business, perhaps the worst news for business owners is finding out their claim has been denied. Some of the most common reasons for a commercial property damage insurance claim to be denied include:
Not Filing The Claim On Time
Commercial property insurance policies require policyholders to notify their insurance company promptly of any loss. If an insured takes too long to file a claim, the likelihood of being content with the claims payment decreases. Policies typically contain time-sensitive requirements for filing a claim and documenting damage.
Not Paying Your Premiums
Keeping up with regular premium payments is especially important. An insurance carrier requires policyholders to pay their premium on time; and – if they aren’t – the insured runs the risk of property damage occurring when the policy is lapsed due to non-payment.
False or Misleading Statements
Once a damaging event has occurred to a business, the insurance company sends its adjuster to investigate the claim. If they find anything suspicious or questionable with the claim, they may deny it. It is therefore imperative for the insured to make sure all statements are factually accurate and contain no embellished or enhanced damage claims.
Insufficient Documentation of Damage
One of the responsibilities property owners have once a property damage claim has been filed is to prove the damages and/or losses to the insurance company. Insufficient documentation of damage to the property and/or lack of a complete inventory of valuables on or in the property before the loss won’t help to prove the case. It is important to accurately document the damage done in a detailed manner by taking photographs in the aftermath to help prove the claim. It can also be beneficial to have up-to-date photographs of the state of the property before any damage occurred, as well, to substantiate the damage claims.
Exclusion Language / Claim Type Not Included in Coverage
Every property insurance policy comes with specific exclusions. No insurance policy covers the entire structure and everything in it, nor does it provide coverage against every possible source of damage. Common policy “exclusions” can include earthquakes, floods, or other risks. If the cause of the property damage is excluded from coverage in the policy, then the claim will be denied.
It’s Someone Else’s Fault / Policyholder Negligence
If someone else’s negligence caused the property damage, the policyholder’s insurance company isn’t responsible—and the policy doesn’t apply. Therefore, the insurnance company will not pay a claim.
Wear and Tear
When a premises owner acquires an insurance policy, the property owner is required to keep up with regular, expected maintenance and repairs, and the insurance carrier’s coverage will be there if an unexpected loss occurs. The insurer expects the property owner to prevent damage. Wear and tear exclusions keep insurers from being liable in situations where the damage is actually due to the insured’s failure to repair, replace, or maintain aspects of the property that need work.
Commercial Property Insurance Claim Attorneys
At Raizner Law, our experienced insurance coverage attorneys have represented thousands of clients against major insurers in commercial property damage disputes. If your commercial property suffered damage and you need assistance with a claim that has been wrongfully delayed, underpaid, or denied, we can help.
