When you hand over a large amount of money for a business-related insurance policy you expect that if you ever need to file a claim, you will get the help that your business needs to keep operating. Sadly, as with policies that protect individuals, business insurance claims can face bad-faith denials by insurance companies that simply don’t want to take a loss on a policy they previously wrote.
When an insurance company chooses to deny a valid business claim, they engage in bad faith insurance practices that could impact a company’s solvency or even their ability to reopen eventually. Thankfully, there are regulations in place that protect policyholders from unscrupulous behavior by insurance companies.
Such behavior opens them up to legal action from policyholders who need the protection that they have paid for. If you paid for business interruption insurance, you may need to push the company to make good on their obligation to you or even take them to court if they refuse to approve a reasonable claim.
What does business interruption insurance cover?
As the name implies, business interruption insurance helps offset financial risks and cover ongoing liabilities a company has when they cannot do business for a reason that is out of their immediate control.
Business interruption insurance can pay for your rent or mortgage while the company isn’t open, as well as other loans or even taxes. Some policies also cover employees’ wages or even the cost of relocating the business or restructuring it to respond to changed market or local conditions.
If you can’t continue to do operations in the facility you currently use, whether due to a natural disaster or fire, your business interruption insurance should protect you and help you cover the costs you have while you can’t operate and that you incur as you move to make the company operational again.
A denied claim could hurt your business’ bottom line
If you find yourself in a situation where you need to file a claim against your business interruption insurance policy, you likely can’t afford to cover those costs without the insurance protection you have paid for.
Once you verify that your claim meets the criteria outlined in your policy and what kind of coverage you have, you may have to take legal action against the insurance company if they deny a reasonable claim.