Without a doubt, getting yourself insured to protect against risk is a common practice. When you start a business, you are ready to take on a lot of responsibilities. With the help of commercial insurance, you can protect yourself against liabilities.
If the insurance company refuses to pay out a claim, it can result in a dispute. There are several reasons for a commercial insurance dispute. In this post, we have mentioned everything there is to know about commercial insurance.
What is Commercial Insurance?
Commercial insurance is a type of insurance that will protect your business from any unforeseen condition. It will protect your business against damages, liabilities, and lawsuits. It is about having balanced risk management. Insurance is a great way to keep your business operations going while you deal with some issues. Mostly, it refers to three types of insurance:
- Property Insurance- it is for all your equipment and office premises
- Workers’ Compensation- for covering the medical costs of your employees if they get hurt on the job
- Commercial General Liability- it is for damages against the third party
It is also known as business insurance because it protects the business from a financial loss. There are different types of commercial insurance.
Types of Commercial Insurance
There are plenty of types of business insurance, you can choose the one that is in accordance with your insurance needs. Here are the most common business insurance types.
- Commercial Auto- it will cover the incidents related the business vehicles and drivers like break-ins.
- Business Income- this insurance will cover the loss of income that a business may suffer after a disaster.
- Crime- covers the loss of merchandise or any other asset of your business because of larceny, embezzlement, burglary, forgery, and robbery.
- General Liability- it protects against the injuries sustained by non-employees on your property.
- Commercial Property Insurance- this covers the damage caused to the real property and other equipment linked to the business operation.
- Worker’s Compensation- it covers the employee in case they are injured during work.
What is Not Covered in Commercial Insurance?
Loss or damage caused because of negligence is not covered by commercial insurance. If you want your insurance to cover flood damage, then you will have to get a separate insurance policy. The simple commercial insurance will cover certain water damage except for flood damages.
Why Insurance Dispute Arises?
There are times when insurance companies deliberately delay or deny a valid claim or refuse to defend a policyholder. Let’s be honest, an insurance company only pretends to care for the people. Instead, they are more concerned about maximizing profits.
Insurance companies have a responsibility to act in good faith and complete their contractual obligations. When an insurer tries to minimize the amount they should pay out on claim, it gives rise to disputes.
Fortunately, insurance policies are contracts and the companies have the duty to adhere to the terms and conditions of the contract. It means the company must evaluate claims properly and offer compensation fairly.
What You Must Do When Your Claim is Denied?
When your business insurance claim is denied, the first thing you should do is check your policy. This is to ensure your claim is covered. In case the claim is covered, you must file an appeal. If the insurance company still refuses to cover the claim, you are advised to legal action.
Common Causes of Commercial Insurance Disputes
There are several reasons that result in a dispute. Here are the top 7 most common causes.
1. Exclusions and Limits of Coverage
The most common cause of an insurance dispute is the coverage. There is a chance the insurance company might have a conflict with the interpretation of the contract. This might include the scope of insured peril, per-occurrence, individuals, and other terms and conditions.
2. Duty to Defend
It is related to the disagreement in a lawsuit over the responsibility of the insurer to provide legal defense for the policyholder. This issue mostly arises when the complaint against the policyholder involves both, covered, and noncovered charges.
3. Assessment of Loss
Another reason for the dispute is the difference in valuation of incurred or projected loss. If your property was damaged, it might include evaluation of repair and remediation costs, anticipated profit and losses, and structural damage.
On the other hand, in a liability case, penalties, fines, investigation and legal costs, and damage of repute are included. A dispute may arise if the company improperly evaluates the loss.
4. Irrational Expectations
Sometimes, the policyholder might believe the underwriter has unreasonable expectations. Hardline position or preconceived position regarding valuation and scope of a claim can cause several problems. It can delay the processing of the claim along with damaging the business relationship between the underwriter and policyholder.
5. Communication Problem
Lack of communication can lead to numerous serious problems. It can lead to a lack of understanding of the insurance portfolio or risk profile of policyholders. In order to avoid disputes, it is advised to have frequent communication at different stages of insurance contract.
6. Wrongly Investigated
If the claim is not investigated properly, then it can result in a dispute.
7. Unfair Insurance Policies
In some cases, the insurance company engages in illegal insurance policies that might lead to a dispute between policyholders and underwriters.
8. Failure to Evaluate a Claim
If the insurer fails to evaluate a claim in a prompt and reasonable manner, it can result in a dispute.
If an insurance company refuses to pay a legitimate claim, we are always willing to help you. We know insurer can take advantage of such a situation, especially if you are not represented by legal expert. We try our best to resolve the dispute in your favor.
The best way to resolve the insurance dispute is through alternative dispute resolution. We, at (enter the name of your company), offers a wide range of solutions for resolving the dispute without the lawsuit. For more information, kindly get in touch with our experts.