Top 5 Reasons For a Business Insurance Claim Denial

May 21, 2020

Business operations involve many risks, but these risks can often be mitigated with business owners purchasing various types of insurance for their business, their property, and their customers. However, what happens if a business insurance claim is denied? This can expose business owners to the same risks they were trying to avoid. Here, we discuss the top reasons for business insurance claim denials.

Main reasons business insurance claims are denied

1.      Alleged delays in filing the claim

Most insurance policies have fairly strict timelines for reporting commercial property damage or another type of injury to the insurer. Failing to meet these timelines could result in the insurance carrier denying the claim.

2.      Alleged premium payment lapses

It is vital that business insurance premium payments are made on time. Even a minor lapse in payment could give the insurance carrier enough reason to deny the business insurance claim. Keeping premium payments up-to-date is vital to ensuring you have continuous coverage to protect your business.

3.      Insufficient documentation for a claim

In order to establish a viable insurance claim with an insurance carrier, there needs to be careful and detailed documentation. Any errors in claim documents or missing information could result in the insurance carrier denying or delaying a claim.

4.      Exclusion clauses

Many business insurance policies contain various exclusions for certain types of damages. This can include exclusions for flood damage, viral infections, etc. It is vitally important that business owners know what exclusions are present in their policies because insurance carriers will likely deny any claims made that are explicitly excluded in the policy.

5.      Failing to mitigate the damage

Most business insurance carriers require that business owners take certain steps to limit the extent of damage that can occur. If a business owner allegedly does not take steps to mitigate damage, the insurance carrier may not compensate them for all the damages they have incurred.

How COVID-19 can affect a business insurance interruption claim

Business interruption insurance is designed to compensate business owners for losses they incur in the event a major shutdown of operations occurs. Typically, this includes things such as natural disasters, supplier failure, explosions or fires, water damage, and more. In many cases, business interruption insurance will also cover losses a business owner incurs due to government-mandated curfews or shutdowns.

However, during the COVID-19 pandemic, many insurance carriers have refused payment for business interruption insurance claims. While stay at home and quarantine orders have indeed been government-mandated, insurance carriers have used exclusion policies to deny many claims. When working to obtain business interruption insurance coverage for a COVID-19 claim, business owners should speak to a skilled business interruption insurance attorney about their case as soon as possible.

When to Call an Insurance Claim Lawyer

If your business insurance claim has been wrongfully denied, you need to speak to an attorney as soon as possible. At Torgenson Law, our skilled team has extensive experience handling these cases. We will thoroughly investigate your claim and your insurance policy in order to secure the compensation you are entitled to. You can contact us for a free consultation of your case by clicking here or calling (602) 759-0012.