When a fire damages a business, it can have a devastating impact on owners. A fire can result in a total property loss, including loss of inventory and damaged equipment. Although filing an insurance claim can help to recoup the cost of repairing or replacing the damaged property, this doesn’t always happen, as claims relating to fire damage can be denied for a variety of reasons. Below we discuss some of the top reasons insurance companies deny fire damage claims in Texas.
Denied Commercial Fire Damage Claims in Texas
If a business incurs fire damage, it can be incredibly difficult to recover from, no matter the industry. Businesses can be vulnerable to threats of fire from wildfires, fires that start at adjoining businesses, lightning strikes, and electrical fires. Although a fire could be started accidentally, it can result in major damage and losses. Unfortunately, in certain situations, a business can be left so damaged after a fire that it may never be able to fully recover.
The overall impact of dealing with fire-related damage can be compounded for commercial property owners if their insurance claim is denied. Insurance claim denials relating to fire damage can occur due to minor errors during the claim investigation process. Insurance providers can also be quick to deny claims relating to fire damage due to speculations of fraud or arson; and, there are many more reasons why commercial fire damage claims are denied.
Reasons Why Carriers Deny Fire Damage Insurance Claims
One of the most common reasons fire damage claims are denied is insufficient coverage. While most commercial property policies do cover fire damage, in some cases they may only cover a portion of the damages. Policies may only cover damage directly caused by flames and not damage due to smoke or water damage from fire sprinklers, for instance.
To avoid an insurance company denying a fire damage claim due to insufficient coverage, commercial property owners must take the time to review their policy for any coverage gaps. In doing this, they can ensure they have the proper coverage in place to obtain the necessary compensation for a fire damage claim.
Suspected fraud or arson are two other common reasons insurance companies deny fire claims. In these cases, insurance companies may attempt to prove the insured intentionally set fire to the business to make an insurance claim. This is an incredibly frustrating method insurance carriers use to avoid paying out on claims; however, an insurer cannot deny a claim due to speculation or suspicion the fire was started fraudulently by arson. In these instances, the insurer may use different language about the suspected fraud, such as:
The fire department was unable to determine the source of the fire;
The insurer believes the policyholder or someone else committed arson to defraud the insurer; or
The policyholder is lying or hiding details about some aspect of the fire damage claim.
Misrepresentation of the Claim
Insurance companies frequently deny fire damage claims due to misrepresentation of the claim or the cause of the fire. In these situations, it is implied that the insured lied or misrepresented the facts of the claim to the insurer, giving the carrier cause to deny the claim. While it is important to always be upfront and honest with an insurer when it comes to filing a claim, a carrier could be found to have acted in bad faith if it is ultimately determined that the policyholder did not misrepresent the facts of the claim.
Not Taking Preventative Measures
All commercial policyholders are expected to take reasonable measures to limit loss or damage to the business. When this doesn’t happen, it can be grounds for a claim denial. For instance, if an employee accidentally started a fire in a business’s break room due to old, faulty electrical equipment, the insurer might deny the claim as the equipment hadn’t been updated or replaced. By ensuring a business is in tip-top shape and not exposed to any hazards that could result in a fire, policyholders can help prevent the frustration of a claim denial.
Fire Damage Insurance Coverage Attorneys
Fires – and the resulting damage – can lead to the total loss of a business; and, often the aftermath is as emotionally and financially challenging as the event itself. The loss of a business to a fire can present great hardship and challenges. While owners may find solace in having the right insurance policy in place, their insurers can still choose to take advantage of them during this traumatic time.
Insurance companies sometimes utilize bad faith tactics to help themselves and not their policyholders. In these situations, they attempt to shift the blame for a covered event to something that is explicitly not covered or excluded under the policy. Insurers may also dispute the costs of repairs and request that inferior supplies be used.
Policyholders have rights that must be honored. At Raizner Slania, our commercial fire damage insurance coverage attorneys are aware of the tactics carriers use to avoid paying the insured what they are owed, and we will fight for what is rightfully due. If you need assistance with a commercial fire damage claim, we can help. Contact our office today to see how we can assist you.