Small business owners of every shape and size maintain multiple insurance policies as a standard cost of doing business. While these insurance policies offer protection and peace of mind, the insurance documents themselves are often difficult to understand, leaving policyholders uncertain about their coverage when they need to file a claim.
While many insurance companies act in good faith when handling your claims, we are already beginning to see small business owners be denied insurance benefits during the COVID-19 health crisis. Insurance companies are increasingly likely to demand huge rate hikes and refuse more claims than ever.
What can you do if your business insurance claim is denied?
The first step when your business insurance claim is denied is to review the notice of denial to determine the specific reasons for the refusal of coverage. There are many different reasons an insurer may seek to deny a claim. Denials are frequently issued where:
- The claim was not timely
- The injury was not covered by the insurance policy
- The insurer suspects fraud
- Coverage limits are met or exceeded
While preparing a response, it is also important to carefully review your insurance policy in light of the reason given for your business insurance claim denial. Your policy will indicate what sort of incidents are covered, policy limits, claims procedures, and many other aspects of your insurance coverage.
You can then prepare an appeal letter that clearly illustrates your best arguments for coverage in light of the terms of your insurance policy and the facts of your situation. You can and should present any additional evidence that supports your arguments at this time.
The insurer may reverse its business insurance claim denial, or stand by its original decision. If the insurer still refuses to pay your claim, you may need to sue the company in civil court.
How We Can help Fight a Business Insurance Claim Denial
An insurer that refuses to pay a legitimate claim can be sued in civil court. Insurance is a kind of contract, and the failure of an insurer to perform its end of the agreement will generally amount to a breach of contract. In addition to this cause of action, some jurisdictions also permit litigants to sue for the bad faith denial of insurance claims as a kind of tort.
Not all insurance claim denials involve bad faith. Bad faith refers to situations in which the insurer has not denied the claim on account of a legitimate belief that the claim is invalid. Instead, bad faith business insurance claim denials occur when the insurer lies, ignores evidence, refuses to investigate, or otherwise intentionally seeks to frustrate the insured’s attempts to receive the benefit of the insurance policy they purchased. A tort claim can be very attractive since, unlike breach of contract claims, tort actions may permit the insured to seek punitive damages, which can often exceed the value of the policy itself.
Free Business Insurance Policy Review
Penn & Seaborn lawyers are actively pursuing these cases on behalf of small business owners who received a denial communication from their insurance companies. If you are a small business owner and have received a denial of benefits notification from your insurance company, we are currently offering a insurance policy review.
Click here to contact us today, or call our office at (334) 676-1626.