Underpaid business insurance claims can be frustrating, and unfortunately, certain types of claims are more vulnerable to underpayment due to complexities, subjective assessments, and insufficient documentation. Identifying these claims helps business owners take preventative steps and understand how to advocate effectively for full compensation.
Business Interruption Claims
Among the most often underpaid forms of business insurance claims are business interruption claims, which compensate for income lost when operations are momentarily stopped for a covered occurrence. Many times, insurers contest these claims on numerous grounds: contesting the anticipated income loss, challenging the restoration period, or excluding entire coverage. Business disruption is sometimes subjective. Thus, insurers could dispute over estimated recovery time or income projections, resulting in differences between the expected and the real payout.
Property Damage Claims
Claims for damage to commercial property—especially following vandalism or natural disasters—often go unpaid. Sometimes, predicted repair costs used by insurers might not reflect current market rates or rising building expenses following major incidents. Moreover, they could designate some damages as maintenance-related problems instead of those resulting from insured events, therefore lowering the overall claim value. Should an insurer think any damages could have been avoided or resulting from negligence, the reimbursement for business owners could be less than planned.
Cyber Liability Claims
Though it's a sort that sees underpayment, cyber liability insurance is becoming more and more important in the digital age. Strict policy definitions may cause insurers to restrict coverage depending on the fast-changing nature of cyber threats and the significant expenses related to data breaches. To further drastically lower the overall claim amount, insurers may also set sub-limits or refuse some cyber-related expenses, like customer notification fees or public relations costs.
Liability Claims
Claims for both general and professional liability may also be underpaid since insurers might dispute legal fees, damages, or settlement costs. Should a company be sued, the insurer may not cover all defense expenses—particularly in cases involving claims outside of policy limits. Businesses may thus have significant unmet legal expenses. Liability claims—especially those involving sizable settlements—may be closely examined by insurance companies, who could contest portions of the claim depending on vague policy language.
Preventative Measures
Businesses should routinely examine their policies, make sure they grasp their coverage limits and fully record everything when making a claim to help prevent underpayment problems. Navigating complicated claims, guaranteeing fair treatment, and getting the best settlement owed can also be accomplished by speaking with a seasoned insurance broker or public adjuster.