Insuring Your Business: Small Business Owners' Guide to Insurance

What Are Your Obligations?

Whether your claim involves property, liability, workers compensation, auto or some other type of insurance coverage, your policy describes your obligations in the event that you have a claim.

For all types of claims, you are required to contact your insurance company right away.

Property Claims

Your policy describes all your obligations in the event of a property claim. Among other things, the Businessowners Policy (BOP) obligates you to:

• Contact your agent and insurance company right away
• Report any violation of the law to the police immediately
• Take steps to protect your property from further damage by making temporary repairs. If immediate repairs to equipment are necessary, save the damaged parts in case the claims adjuster is interested in examining them
• Resume all or part of your operations as quickly as possible

Business Income Claims

If your policy provides business income coverage, you will need business records, such as those listed below, to establish the amount of your insurance benefits. They include:

• Historical sales records
• Income and expense information as shown in recent profit and loss statements and/or income tax forms
• A record of extra expenses incurred to resume business operations after a covered loss. Such expenses could include temporary rental space, temporary equipment rental and moving expenses
• Receipts/records for damaged inventory
• Other business records that may help project what your business's profits might have been had a loss not occurred

If You Have A Liability Claim

If someone threatens to file a lawsuit against you, you should let your insurer know about the possibility of a liability claim. However, there may be events that could result in a liability claim but may not. A classic example is when a third party—for example, a customer, client or delivery person—suffers a fall on your premises. At the time of the fall you do not know whether the person will sue. However, this is the type of “occurrence” that could lead to a lawsuit and that the BOP requires you to report to your insurance company. You should give the insurer notice of the specifics of the event and contact information for any witnesses.

The BOP also requires that you should not incur any expenses, other than for first aid, for anyone who claims to have been injured.

If there is a lawsuit, you must notify the insurer immediately and cooperate in the investigation and defense of the case.

If You Have A Workers Compensation Claim

Workers compensation insurers generally want to be notified quickly if an employee has a work-related injury. Their immediate action in providing an assessment of the accident and medical care can often help accelerate the employee’s recovery, rehabilitation and return to work. You are obligated to cooperate in the insurer’s investigation of the claim, providing records and any other information requested.

If You Have An Auto Claim

Employees who drive vehicles on business, whether their own or the company’s, should be instructed on how to respond in the event of an accident. Carrying an accident kit in the vehicle will help assure a proper response to an accident.

After an accident, the police should be notified so that they can make an accident report. Obtain names and contact information for any witnesses.

Notify the insurer quickly of the accident and cooperate in the insurer’s investigation.

If You Are Unhappy With How Your Claim Was Handled

Your insurance policy probably contains information about how you are obliged to proceed if you are unhappy with how your claim was handled. Be sure to read the policy’s instructions about the dispute resolution procedure you agreed to when you bought the policy. You will need to follow that procedure and should be aware of it before you take further steps.

These are some further actions you may wish to take.

• Talk to your insurance agent, claims adjuster or claims manager to explain your point of view.
• Call the consumer affairs or complaint department of your insurance company and tell your story and why you think you deserve a larger settlement.
• Contact your state's department of insurance about the problem.
• If you've tried all other options, consult an attorney who specializes in insurance matters to see if he or she thinks you have a valid claim that is worth a lawsuit.