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  • Craig Harrell

Common Business Insurance Claims

Updated: Apr 16

If you're a business owner, you probably know the value of a comprehensive insurance plan. However, it's not just about having insurance; it's equally important to understand how it works. Many business owners encounter surprises when they file claims only to find them denied for various reasons. Understanding the most common business insurance claims and why they may be denied can help you navigate the complex world of business insurance with ease.

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Theft and Burglary

One of the most frequently filed business insurance claims involves theft and burglary. Whether it's a brick-and-mortar store facing shoplifting or an office dealing with stolen equipment, businesses often experience losses due to these unfortunate events. However, insurance claims for theft can be denied if the insurer deems that proper security measures were not in place, or if the theft occurred due to the negligence of the insured. For instance, if a business fails to secure its premises or doesn't properly lock up expensive equipment, a theft claim could be rejected.

Property Damage

Property damage, often resulting from fires, storms, vandalism, or natural disasters, is another leading cause of business insurance claims. However, not all types of property damage are covered by standard business insurance policies. A typical scenario where a claim might be denied is when a business located in a flood-prone area doesn't have specific flood insurance. Standard policies usually don't cover such damages, leading to denials of claims arising from them. Always check the specific conditions and exceptions in your policy to ensure you have adequate coverage.

Workers' Compensation

If an employee gets injured on the job, they are usually entitled to workers' compensation benefits. These claims can be frequent, especially in industries involving physical labor or high-risk activities. However, these claims can be denied if the employer cannot prove the injury occurred at work or during work-related activities. A lack of documentation, such as incident reports and medical records, can also lead to claim denials.

Liability Claims

Liability claims are common, especially for businesses that have regular interactions with customers, such as retail stores, restaurants, and hotels. These claims typically involve injuries that occur on business premises. A common reason for denial of such claims is a lack of proof that the business was at fault. For example, if a customer slips and falls in a store, but there's no evidence that the store was negligent (like a wet floor without a sign), the claim could be denied.

Business Interruption

In the face of unforeseen circumstances, such as a pandemic, natural disaster, or significant equipment failure, businesses often have to halt operations temporarily, leading to business interruption claims. However, these claims can be denied if the business interruption is due to a cause not covered by the policy. For instance, many standard business interruption policies do not cover closures due to pandemics.

Be Proactive To Protect Your Business

While it's essential to understand the most common business insurance claims and why they might be denied, remember that every insurance policy is unique. It's crucial to read the fine print and understand the terms and conditions of your policy to avoid surprises when filing a claim.

Regularly review and update your coverage based on changes in your business operations or risk levels. In addition, maintain good documentation of all business activities, property, and employee information. This can be invaluable when filing a claim. Ensure your business follows all recommended safety guidelines and procedures - not only to prevent incidents from happening but also to demonstrate due diligence in the event of a claim.

Insurance is a critical part of risk management for any business. By understanding the most common claims and the reasons they might be denied, you can better prepare your business and protect your investment.

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