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4 Common Reasons Insurance Claims Get Denied and How to Avoid Them

When disaster strikes your business sometimes the only thing worse than dealing with the damage is dealing with your insurance company.

A shady insurance company will look for any reason to deny your claim, even if you’ve been a perfect customer. Sometimes even the smallest detail can result in denial, leaving you to foot the bill for repairs.

Here are some of the most common reasons insurance claims get denied, and how you can avoid them:

1. There are Gaps in Your Coverage

The best way to be sure that your claim will be accepted is to know your policy inside and out, make sure you know what you are covered for and what you’re not. Some common issues businesses run into when filing a claim are:

  • Claims are outside of the policy coverage
  • Claims are only covered by additional insurance you did not purchase
  • Coverage of your claim is excluded in the fine print of your contract

A good insurance broker will get to know your business and its unique risks to discuss what coverage will best benefit you. When getting an insurance broker quote from an ethical, reputable insurance company be sure to ask your broker any questions you have regarding your new policy.

They should go over with you, point by point, what is covered by your policy and address any concerns you have about gaps in coverage before the deal is finalized.

2. The Time to Submit Your Claim Lapsed

One of the most common reasons business insurance claims get denied is due to the time period allotted for making claims after an incident passes before any claim is made. Claims made after the period determined by your policy will automatically be denied, and claims will be adjudicated on the available information given before the closing date if there is any.

Some policies establish a very clear cut-off date, such as 60 days after an incident. Other policies have a vague concept of timeliness, speak with your insurance provider to make sure you are aware of any time constraints in your policy.

3. There is Suspicion of Fraud

If fraud is suspected the insurance company may deal with the case as it sees fit with consequences ranging from an investigation to automatic cancellation of your insurance policy.

Typically, an investigation will commence starting with the insurance broker on your case sifting through the information you have provided, any physical evidence of the claim, and even looking at your account history to identify any suspicious patterns.

To avoid your claim falling under a fraud investigation, read over your statement carefully and check for factual accuracy as well as up-to-date information. Any inaccuracies in your claim, such as missing details about updates to the property or misinformation via embellished claims, may trigger a fraud investigation.

4. The Fault is Yours

There are several reasons that you could be found at fault for the damages to your business. First and foremost, causing intentional damage to your business and filing a claim would not only be your fault but also could fall under insurance fraud resulting in policy cancelation and potential legal action.

However, it is much more likely that you would be found at fault for failure to maintain or update your property, such as repairing damaged structures or upgrading old wiring, which makes your business more prone to damage. Additionally, you may be found at fault for failing to take appropriate preventative measures, such as laying down sandbags to prevent flooding.

The best way to make filing your insurance claim easy is to know your policy backward and forwards. Discuss the details of your policy in-depth with your insurance broker and ask any remaining questions you have before finalizing the deal. Just remember you can reach back out with questions anytime, and when filing a claim honesty is the best policy.

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