Reduce Chance of Insurance Claim Delay, Denial

Despite protecting yourself from costly litigation by using an indemnification clause in your leases with tenants and reducing your exposure to personal injury lawsuits by properly maintaining your center or building, you may still be on the hook for an accident, unless you’re immune from liability. Having insurance that will cover the related costs helps soften the blow. But if you or your property manager don’t take the proper steps when filing your insurance claim—for example, you wait too long to file the claim or you don’t fully cooperate with the insurer’s investigation—you could delay the resolution of your claim, stalling the check that you’re entitled to. Even worse, you could cause your claim to be denied. Consider these three points when filing claims with insurers to reduce the chance that they’ll be delayed or denied.

Determine which policies are relevant. First, you should determine which insurance policies may cover your claim. Depending on the nature of the event underlying the claim, you may have coverage under several policies, such as your general liability insurance policy and your property insurance policy. Also, you may have coverage under someone else’s insurance policy, such as a tenant’s, contractor’s, or third-party property manager’s policy.

Promptly and properly notify insurers. After you’ve identified all the insurance policies under which you may have coverage, promptly and properly notify the appropriate insurers. Each insurance policy most likely spells out the notice requirements, which typically cover: (1) whom you notify (usually your insurance agent or broker; (2) how and by when you should give notice; and (3) what information you should provide in your notice.

It’s important to comply with insurers’ notice requirements and other policy conditions. If you don’t, you may give the insurers an easy excuse to deny your claim. If an insurer denies your claim based on a technicality, such as your failure to give notice to the correct person, a court is unlikely to uphold the insurer’s denial unless it can prove that it was “prejudiced”—that is, hurt—by your failure to strictly comply with its requirements. But even if you ultimately prevail in such a situation, your failure to strictly comply will unnecessarily delay the resolution of your claim and cost you time and money.

Cooperate with insurance adjusters. Most insurance policies require the insured to cooperate with the insurance adjusters as they investigate claims. Cooperating with insurance adjusters is in your best interest because it will lead to a faster resolution of your claim.

Maintain open lines of communication with adjusters and promptly comply with requests for documentation or information to the extent that such requests are reasonable. But don’t completely rely on adjusters’ findings. They may value things differently from the way you do. If you’re concerned about an adjuster paying you less than you think you deserve or denying your claim, you may want to hire an insurance consultant or insurance coverage attorney to help you get what you deserve or to substantiate your claim if you think the insurer is going to deny it.

Practical Pointer: Keep copies of all correspondence, including email, regarding your claim, and keep written records of all conversations with your agent or broker, the adjuster, and anyone else working for the insurer. Also document all actions you take during the investigation process. And keep track of any money you spend relating to the claim, including money you spend on cleanup, transportation, and phone calls, so that you can request reimbursement from the insurer.