Top reasons your commercial claim may get rejected
By: Jurgen Hellweg, CEO of Western National Insurance
As a business owner, there are so many aspects to consider and understand to ensure a successful enterprise. “Key among them is your insurance cover,” says Jurgen Hellweg, CEO of Western National Insurance. “Being aware of common issues that could affect a claim can prepare you and keep you in business.”
It is difficult to highlight why a claim may be repudiated, or not be paid out adequately because commercial insurance is quite different to personal cover. The types of risks faced by a business owner may vary enormously depending on the industry they operate in, however there are some key risks that any business owner can avoid to ensure a smoother and more successful process, should the need to claim arise,” he says.
1. Not working transparently with a qualified commercial short-term adviser
As your business will have unique risks, an adviser is best placed to make sure you get adequate cover. While elements of running your business may seem simple, insurance is technical and there are hidden risks you may not think of. An adviser knows how to calculate appropriate insured values and how to structure your excesses to best suit your cashflow. Hellweg says the key is to be honest and open with your adviser and therefore your insurer – from your history to any changes that may need to be factored in to your cover. “Consider for example, a building owner who has business tenants. At time of taking out cover, the details of the tenants were declared to the insurer who assessed the risk as being acceptable for the premium charged. Over the period of the year, there is a change in tenants, where the new tenant may be considered a higher risk. By not declaring any changes during the period of insurance, any claims – such as damages from a fire to the building – may be rejected.”
2. Failing to identify the risks that could put you out of business
These risks don’t always jump out at you, and if they do, you might be tempted to skimp on the cover because the event is unlikely to- or seldom happens. “The impulse is to insure those day to day risks, which will probably never put you out of business but happen on a regular basis, but what will you do if the unthinkable happens and your entire business is destroyed? Only insuring your cellphone will be your biggest mistake,” Hellweg says. “Interestingly, cover for a huge loss is actually not as expensive to take out, and will be worth so much more than the price you pay should you ever need to utilise it.”
3. Not maintaining your part
Any assets you insure from your buildings to vehicles, equipment, machinery and the like must be maintained in order for your insurance cover to be consistent. “Maintenance falls on you, the business owner. Failing to keep up maintenance will likely result in a claim being rejected, as elements like ‘wear and tear’ are possible to detect at claims stage. There would be nothing worse than receiving no pay-out simply because you didn’t service your vehicle, which lead to a malfunction or accident, or you didn’t repair a leak in your building’s roof, which lead to a bad flood,” Hellweg adds.
It is best to keep up your side of the deal and to build sound relationships with your insurer and broker – this will give you peace of mind and certainly go a long way to keeping you in business.