Insurance doesn’t just prepare business owners for inevitable, but the uncontrollable losses that happen in life, it protects business CEOs against every loss. As a business owner, what to insure is very diverse depending on the kind of business you are into. Certainly, whatever you decide to insure is worth very much to you, but you must avoid the insurance violation.
Losses suffered in insured aspects of your business are covered by the insurance company to the degree agreed when getting the insurance. According to the legal experts at Herber and Lux, some businesses suffer losses and have to bear it all by themselves despite having insurance because of certain insurance violation to their insurance agreements.
Some of these mistakes are quite easy to make and anybody can make them if care is not taken. Insurance violations can result in delayed payments or outright lack of payment.
Insurance Violation every Business Managers should avoid
Delayed Notification of Insurance Claim
This is of the most common sources of insurance violation by business owners. As a business owner, if you have an insurance policy, one of the very first calls you make subsequent to an accident or a loss is to your insurer. In the heat of the situation, it is very possible to be overwhelmed and out of sorts, hence forgetting what to do. Engage whatever thing or way that will help you remember.
An immediate call to your insurer is important for two reasons. The reasons for failure to give timely notice to insurers vary from carelessness to force majeure. The consequences, however, vary depending on:
- The status of the notification condition, i.e. whether the condition of timely notification is precedent to the insurer’s liability to pay the claim.
- The definition, i.e. which occurrences should be notified to the insurer and when.
- The consequences of the failure to comply with the notification condition if it is not a ‘condition precedent to liability’.
- The legal environment where the contractual term is considered.
Insurers are entitled to investigate the claim for a reasonable time to understand the lately notified claim unless they don’t represent unequivocally to the insured that they do not intend to rely upon the breach, and this shouldn’t constitute estoppel.
Poor Documentation of Insurance Policy
This is usually unexpected for business owners because they are expected to be good record keepers yet it is one of the most common insurance violations reported every now and then. As a business owner with the insurance policy, keep a separate file for the policy. All discussion with your insurance company concerning your policy must be properly documented including time and date.
An important thing to note here is that no conversation is inconsequential, document it all. Have a copy of every mail you sent to your insurer. After phone conversations with a representative of the insurance company, send an email or letter containing the details of the conversation. In case of loss or accident, take pictures where you can. Guard against poor documentation or else you might end up losing your claim or at best your claim will be delayed.
Lack of Cooperation with Your Insurance Company
The main purpose of cooperation with your insurance company is to prevent collusion while making it possible for the insurer to make a proper investigation. In addition, the purpose of a cooperation clause is to enable the insurer to obtain relevant information concerning the loss while the information is fresh, to enable it to decide upon its obligations and to protect itself from fraudulent and false claims.
Accordingly, a cooperation clause requires honest cooperation and telling the truth. The duty to cooperate arises from the inclusion of a cooperation clause in the policy of insurance. Because this cooperation can fairly be characterized as a duty, the failure to comply can result in the loss of coverage under the policy. The standard by which coverage can be terminated due to the failure to cooperate varies depending upon the jurisdiction, but there are some common general predicates to consider.
In order to demonstrate that an insured has failed to cooperate after reasonable communications of the insurer’s request for cooperation, most jurisdictions require the insurer demonstrate both an intentional failure to cooperate and actual prejudice to the insurer’s interests. Learn more about the conversant with what is required of you and do.
Personal Payment of Third-Party Claims
In the event of an accident, you can be tempted or pressured to use your money to take care of the third party and their properties. A good example of a business owner is taking money out of your pocket to care for injury sustained by an employee in the workplace. This is a bad idea because:
- Many insurance policies frown at taking on such expenses, especially without the consent of your insurer
- Secondly, injuries or damages that seem minor initially can escalate after a few hours.
All of the insurance violations listed above are common among business owners and are potent enough to deny you access to claims. Avoid these mistakes. Other moves necessary for business owners in getting claims are:
- Follow your insurer up. Don’t just cross your legs expecting your claim to come in. If you do not hear from the adjuster after a few weeks, make contact.
- Read your policy very well. Understand the pros and cons.
- Don’t take your insurer’s calculation as ultimate, check and ask questions to ensure proper valuation.
- Don’t be too quick to admit fault in whatever damage happens, let your insurer handle it.
With all the above, you will be avoiding common insurance violations by business owners hence your claim won’t be delayed or denied. In addition, you must know that there are no cutting corners when it comes to hiring a lawyer for whatever reason. Going for the best possible lawyer goes away in helping you win whatever case you may be involved in and also helps you stay on track in order to avoid legal tussles.
Culled from Market Business News | Common Insurance Violations Every Business Owner Should Prevent