In the event of a catastrophic commercial property loss, the process of getting your business back up and running can be overwhelming. Although infrequent, these types of claims can severely impact operations, earnings, morale, and company reputation. In the moment, responding to the loss can seem daunting. But the actions you take within the first few hours can make the difference between getting your business back on track as soon as possible or experiencing significant roadblocks and delays.
Eastern Insurance Group offers the following guidelines to help prepare you to navigate the commercial property claims process, should you suffer a loss. This is a general overview. If you have suffered a loss and need information related to your specific situation, we recommend you contact your Eastern Insurance Group representative who can help you create a customized response and management strategy.
Who is involved in the commercial property claims process?
When you are insured, suffer a loss, and file claim, you can expect to engage with a number of parties who bring specific expertise to the table.
Adjusters inspect and assess the damage. They also estimate the value of the loss. After they file a report of their findings, they will share their initial estimate for review with your contractor to come to an agreement on scope and cost. Any difference will be discussed and “adjusted” as necessary. The insurance company will make an offer to settle the claim and send a Proof of Loss form. Once reviewed and signed, the adjuster will process the settlement check.
Agents or Brokers
Business owners who have suffered a loss may turn to their agent or broker to act as their advocate to help ensure a smooth settlement process. Brokers can assist with emergency responses, securing a claim advance for large losses, and settlement valuation.
Insurance Claims Forensic Accountants
These specialists will be hired by your carrier to assist in calculating any business income loss due to the property claim. They will work with your accountant in organizing this aspect of a claim.
Fire/Water Remediation Specialists
These specialists will be your “first responders” to begin immediate cleanup for any loss, including water remediation, board up of open doors/windows for building security, soot/smoke damage, and moving undamaged business personal property out of harm’s way.
Before a loss
Losses can happen at any time, which is why it is important to prepare your team and property to be resilient. A successful path to preparation includes:
Understanding your existing coverage
Read your policy carefully to help you understand your coverage, exclusions, rights, and obligations before any damage occurs.
Identifying key internal and external contacts
Keep a list of important points of contact in sales, operations, accounting, warehousing, management, and risk management. Also document your claims specialist and contractors you may turn to for salvage and repair services.
Securing important documents
Make sure your financial, inventory, HR and other crucial records—including customer databases—are housed in a fireproof location or backed up to a remote server or the cloud.
Creating an inventory and taking photos
Document your equipment and the property itself to prove the extent of future potential damage. Update the photos annually.
Establishing a disaster plan
Create and communicate a disaster plan that includes an up-to-date emergency contact list so employees are prepared should a catastrophic event occur. Additionally, establish an emergency response for vendors (Fire/water remediation firm, electrician, plumber, etc.) for immediate implementation to initially mitigate/handle the loss.
Steps to take in the event of a loss
Once you’ve been made aware of a loss—whether caused by fire, water, wind, vandalism, or other peril—there are a few immediate steps to take to mitigate the situation and prevent further damage.
File the claim
Notify your insurer and file the claim as soon as possible. This will alert the carrier to send an adjuster to assess the damage.
Prevent further damage
Implement immediate emergency measures to help protect the property from further damage. Preserving the property as much as possible is required by most insurance policies.
Document and photograph the site
Write notes and take both wide-angle and close-up shots to document all damages. Preserve and back up security footage, if it exists. Discard nothing until the adjuster has conducted a site visit.
Restore fire protection
Get your fire protection system—including extinguishers and sprinkler heads—back online immediately.
Make reasonable temporary repairs
You may need to make temporary repairs. If you do, inform the adjuster right away and provide your rationale. Be aware that you may not recover expenses related to any actions taken without prior authorization.
Make permanent repairs
After assessing the site, your adjuster will likely engage with a construction consultant to develop a scope of work and then invite a few contractors to bid on it. Eventually, you, the adjustor, and the selected contractor will agree on a price for the reconstruction work.
Track claim costs
Keep a ledger will all costs related to the loss. This may include temporary repairs, building reconstruction, and property replacement costs.
It’s important to return to normal business operations as soon as possible, even if this means setting up a temporary location, running extra shifts to restore production, or purchasing a competitor’s product to continue serving your customers.
After the loss
As your business begins to recover from a commercial property loss, it is important to follow policies and procedures related to the claim, including:
Inspect the property as soon as possible after the loss and include anyone involved in loss negotiation; make notes and document the site with photographs or videos.
Create and maintain a transparent flow of information among those overseeing the claims process, employees, and other stakeholders. Also, coordinate the gathering and sharing of information across departments to ensure an acceptable result for the organization and the insurer.
Every claim is unique, though business owners often make a few common mistakes when dealing with commercial property loss that may cause claim delays, such as:
Failing to protect your property
You must be able to prove you have done everything within your power to prevent additional damage after a loss. Track and keep a record of your actions, including emergency measures and temporary repairs.
Failing to submit timely proof of loss
Timely proof of loss is crucial. You can often start the claims process with a single typed page that states the necessary information. Waiting can mean significant delays in payment.
Becoming worn down by the process
Don’t settle for a quick, cheap settlement because you’re tired of the process. Delegate tasks and postpone negotiations to help ensure you’re in the right frame of mind to fight for a fair settlement.
Accepting the claim denial
If your initial claim is denied, asked for a detailed coverage opinion letter and get a second opinion from a qualified insurance professional.
Talk to a trusted partner
The steps above can help you prepare for a loss and follow best practices both during and after your property has suffered damages. One of the most important ways you can prepare your business for recovering from loss is to make sure you have the right insurance plan in place to cover the repair and replacement of your property should the worst happen. Your Eastern Insurance representative will review your existing plan and help you determine whether your commercial building, business personal property, business interruption, and extra expense coverage is aligned with your current needs.
Contact your EIG representative today at [email protected].