When a business suffers a loss, whether it be a theft, fire, property damage, or something else, the associated business interruption can often prove to be equally bad or worse.
In one way business losses in California are like any other losses, the same principles regarding the insurer's duty to fairly and thoroughly investigate and settle the claim for its fair value apply. However, because the insured is a for-profit enterprise, it is treated as such, and as if it should be savvier than your average person. Insurance companies often put harsh burdens and take tactics on commercial losses that are utilized less often in the non-commercial context.
Frequently, there are two aspects to a business loss claim: 1) property damage or loss, and (2) resulting business interruption. Your basic property loss/damage part of a business claim does not differ much from other such claims, involving investigating the loss, and estimating of the cost of repair. Insurers, however, often attempt to have businesses shoulder large parts of the investigation, by hiring experts, compiling information, etc., a lot of which may be improper given that the insurance company has the non-delegable duty to pay the claim.
A business loss or property damage frequently interrupts the ability of the business to continue its operations at the same level without a temporary downturn while the loss is addressed and absorbed. This is what business interruption coverage is meant to cover, the loss of business income. Thus, business records become key in a business interruption claim, and an avenue for the insurance companies to cause mischief and create grief for the business owner. New businesses with a limited track record, regardless of benchmarks and other indications of success, will face skepticism. Good supporting documents reflecting that the amount claimed is the amount which would likely have been made had the loss not interrupted your business can make the difference. Things like contract, orders, inventory movement, sales trends, etc.
Suspect circumstances and any indications the business was failing, are red flags for a fraud investigation, which seem to happen in trends amongst certain businesses. Fires and thefts can be denied by the insurance company as staged, fraudulent losses. The tremendous documents a business has to produce to pursue its claim often contains fodder for misrepresentation or fraud claims. If a claim is denied based on a mispresentation, fraud, or arson, the issue in a bad faith case becomes sharply drawn, whether or not the insurer has wrongfully accused a policyholder of insurance fraud. This can be dramatic, high-stakes, contentious cases, because of the extreme position being taken.
Business claims are often complicated and insurance company's tend to put business savvy adjusters on the claim. A business needs to be prepared to produce organized records relating to the loss, which can be quite broad when income are involved. Insureds must also be careful with what they are providing, and how your insurance company seems to be treating the claim. Legal counsel can often be worthwhile for a claim of any significance.
Any business suffering a loss, and struggling with an associated insurance claim, can contact us, either by phone or through the website contact form, and we can discuss your case, free of charge.