Imagine for a moment that your home or business has experienced a fire, theft or natural disaster. This is traumatizing enough. Now imagine the feeling when you find out that your insurance claim has been denied. You feel betrayed, frightened, confused, angry and like you have nowhere to turn. 

These traumatic feelings can be minimized if you have proactively prepared for the unthinkable. 

Listed below are some of the most common reasons property insurance claims are denied, and what you can do to avoid having these factors affect you and your claim. 

1. Not having your property properly documented 

As is discussed in my last article on the ASBA website entitled “Property Documentation Can Sound Boring. It’s Not. It Can Save Your Business”, the foundation of a good business risk management plan is having your business assets photographically and textually documented. This property documentation is the cornerstone of your relationship with your insurer, because without proper documentation you have no proof of what your insurance policy covers. Having this documentation minimizes the risk for the next reason claims are often denied. 

Tip: Have your property properly documented. 

2. Exclusion Clauses 

Every property insurance policy includes specific exclusions. If the cause of your property damage is excluded from your coverage, or if your policy contains language stating that items not specifically listed are not covered, you may be wasting your premiums on a policy that won’t reimburse you when you need it the most. 

Tip: Read your policy and ensure that it covers what you need it to cover. 

 3. Insufficient documentation of the damage 

It is your responsibility as the property owner to file and prove your claim to the insurance company. It is not the insurance company’s responsibility to prove the claim to themselves. In order to prove your claim you must accurately document the damage done to your property. Having your assets properly documented as defined in item #1 above will greatly facilitate this process because it gives you the “before” side of the equation. The photos you take in the aftermath of the incident then become the “after” side of the equation. 

Tip: Take detailed pictures immediately of everything that was damaged in the incident. 

4. Not filing your claim on time 

Your insurance company will have specific timelines you must adhere to when filing a claim, including notifying them promptly of any loss. Having your property properly documented will facilitate this process because you won’t be scrambling around in a panic after an incident occurs trying to figure out the extent of your losses. 

Tip: Read and comply with the filing timing requirements in your insurance policy. 

5. Not taking sufficient protective measures following a loss 

Did you know that it is your responsibility following an incident to protect your property from further damage and to minimize the extent of the loss? Leaving the property exposed to additional damage and not taking reasonable steps to reduce the extent of the loss could be grounds for denial of your claim. 

Tip: Protect your property from further damage by whatever means are necessary. 

6. Non-payment if premiums 

This should go without saying, but if you are behind on paying your premiums and you experience a loss there is a good chance your claim will be denied. 

Tip: Always pay your premiums on time. 

My Business Property LLC stands ready to help protect your business by professionally documenting your assets so you are prepared to file a claim when the need arises. 

Remember – having insurance but not having your assets documented is like having an alarm system but never turning it on. The first step is useless without the second step.