Claims Process: Best Practices for Fast Approvals in Business Insurance

If a customer files a lawsuit against you, a slow insurance claims process can exacerbate the situation. Delays can hurt cash flow, business operations, and customer relationships. Insurance is a necessary financial safety net, but only if the coverage is suitable and you know how to deal with the insurance adjuster.

In this guide, we will go over how to maximize business insurance claim success, best practices, and examples.

Understanding the Business Insurance Claims Process

Here is a step-by-step breakdown of a business insurance claim, from incident to payout.

Incident occurs

After an incident occurs, you need to notify your insurance company ASAP. If you wait over 24 hours, exceeding the stipulated time frame, the insurance company may reject your claim.

Documentation and preservation

Document everything. Be as specific as possible. If you say a table has been damaged, insurance may only reimburse you for the cheapest table on the market. If you name the Luxury Oak Wood Designer Table, its value will be higher.

In addition, you should preserve anything that has been damaged. When possible, it is better to have physical proof of damages, such as if company equipment has been broken.

Adjuster investigation

An insurance adjuster will be assigned to your case. They will review and investigate the business insurance claim.

Claim decision

After a while, the adjuster will come to a decision regarding your claim: whether it is accepted, and what results are possible.

Common timelines for different types of claims

If you’re wondering how long a business insurance claim takes, it can vary greatly depending on the type of insurance. Here are some estimated durations for common types of business insurance:

Property: Commercial property insurance claims require adjusters to thoroughly examine damaged property. The process can take weeks or months.

Liability: Commercial liability claims can take years to resolve fully depending on the case complexity.

Workers’ comp: Work and medical records typically make workers’ compensation claims relatively fast to payout. Receiving a workers’ comp settlement takes from six to ten weeks. However, more complex situations and disputes could take years.

Common Causes of Delays or Denials

Incomplete or inaccurate claim forms

Any inaccuracies or missing information in your claim submission can result in delays.

Always double check your insurance form before submitting it. Deceptive claims can be a federal crime. Felony charges, jail time, and restitution are all penalties for insurance fraud.

Missing documentation or proof of loss

You need to have evidence for any insurance claim. Example evidence includes:

• Police reports
• Emails and correspondence
• Physician records
• Photos and videos
• Receipts

Delays in reporting incidents to the insurer

Business insurance claims come with a deadline. You can’t wait forever and expect the insurance company to accept your claim. First, you need to notify your insurance company when an incident occurs. Tell them there was a fire, burglary, or a customer injury.

Second, it’s also important to file a claim for your incident promptly so you don’t miss the claims deadline following an incident, which is usually 30 to 90 days.

Policy coverage misunderstandings or exclusions

Businesses may not understand that even comprehensive business insurance policies have exclusions. There are always perils and situations that insurance will not cover.

Business insurance also has its limits. Know your coverage limits beforehand so you are not caught off guard when the insurance payout isn’t enough to cover a liability lawsuit.

Disputes over claim value

Your insurance adjuster may disagree with you over how much of a payout is suitable for the claim. The amount you receive will depend on numerous factors, such as:

• Actual cash value
• Damages
• Settlement amount
• Coverage limit
• Deductibles
• Legal fees
• If there is a claim dispute

Fault and Liability

While you should never exaggerate or misrepresent your insurance claim, it doesn’t mean you should go telling everyone it was only your business’ fault the incident occurred. For example, if it was your business’ fault for keeping unsafe conditions, leading a shopper to fall and break their back, it can be risky to explicitly admit fault to your insurance adjuster.

Best Practices for Fast Approvals

Report promptly

Businesses need to notify their insurance company immediately after an incident. Within 24 hours is best. Many business insurance policies come with time-sensitive reporting requirements, so if you miss the deadline, your claim may get automatically rejected.

Make sure you know the procedure for notifying your insurance company, such as who you need to call or email. Modern business insurance companies also use client portals and phone apps to make the claims process more convenient.

It can be confusing to know what type of insurance fits the incident. Notify your business insurance companies just in case.

Gather complete documentation

Your documentation needs to be meticulous and complete. Keep logs and documentation of all incidents. Note down what happened, and exactly what actions were taken by the business after the incident.

• Photos
• Videos
• Receipts
• Police reports
• Witness statements
• Physician records

Know your policy

Coverage limits: Business insurance will only cover up to a certain amount. You need to choose a suitable coverage limit when buying your policy. How much coverage your business requires depends on your industry, risks, and risk tolerance.

Deductibles: You need to pay out-of-pocket to reach the deductible amount before business insurance will kick in. For example, if the liability insurance has a deductible of $1,000 and you need to pay a settlement of $50,000, insurance will only kick in after you pay the first $1,000 yourself.

Exclusions: Any excluded types of incidents or claims will not be covered by insurance. If you want an excluded peril to be covered, you need to agree on an insurance endorsement or add-on beforehand

Required procedures: You must meet any requirements and follow procedures as outlined by your insurance company.

Assign a claims point person

Regardless of the size of your company, there should be an employee designated to manage business insurance claims. They should manage or be involved in all insurance communications and follow-ups.

Medium to large businesses may want to have different claims point individuals for each type of insurance or every level of complexity. For example, the point person may be designated based on:

• Routine vs complex claims
• Workers’ comp vs liability insurance
• Specialized claims that require knowledge of regulations and codes
• Legal expertise for litigation claims
• Interpersonal skills and attention to detail

Keep organized records

It’s best to maintain a centralized file of policies, prior claims, and relevant documents. Businesses can use specialized insurance management services to keep track of all key information, such as deadlines and expiration dates. Something as common as Excel can also work great. Many insurance brokers also assist businesses with reminders and updates.

Communicate

It’s best to stay in regular contact with your adjuster and respond quickly to any questions or requests. If you take a long time to respond, the adjuster may doubt the accuracy of the claim details.

Working with Insurance Adjusters

The insurance adjuster is the agent who’s going to review your business insurance claim and investigate its validity. Here are the basics of what they do:

• The adjuster assigned to your case reviews your claim and policy details
• They interview the involved parties and look over the evidence
• They go over your insurance payout options (if the claim is covered by your policy)

Build a cooperative relationship

Insurance adjusters have a bad reputation for wanting to disprove your claim. True, if you get unlucky or have a bad insurance company, you might run into an adjuster who is harsher and stricter with the policy. But in general, it is good to build a cooperative relationship with your adjuster. Show up for meetings, fill out forms, and reply to emails promptly.

Being clear and consistent in providing details

Clarity and consistency are both crucial. Make sure when filling out the insurance form that everything is detailed and clear. Label items and name parties properly. Adjusters need to contact witnesses and other involved parties, so the more information you give the better.

Avoid speculation

Speculating or exaggerating in your insurance claim can cause your insurance adjuster to be seriously concerned. You should always stick to documented facts. Confusing details that don’t add up could cause your entire claim to be thrown out as fraudulent if the adjuster deems them a big red flag.

Technology and Tools to Speed the Process

Digital claims portals and mobile apps

Many business insurance companies today use digital client portals. Some even offer their own mobile apps that let you very quickly file an insurance claim, even if you’re on the move.

Cloud-based document storage

Multiple cloud backups ensure that any documentation that is needed can be instanted accessed by you or your insurance adjuster.

Your business may also want to keep physical copies of important insurance claim info in the office. That way if the cloud storage system goes down, you will still be able to procure important information.

Automation for reminders and follow-ups

Like with other business processes, automation software can be advantageous for insurance compliance and claim management. Use reminder apps to ensure you don’t miss any business claim deadlines.

Preparing Before You Ever File a Claim

Annual policy reviews to ensure adequate coverage

Businesses should review every type of insurance they have annually. Since policy renewal dates vary, it is important to stay organized. Ensure business owners, managers, or other essential personnel know the coverage limits and exclusions.

Risk management strategies

Risk management is a crucial part of running any business. It minimizes the severity of incidents and prevents catastrophes. Here are the essentials of a good risk management strategy for business insurance:

• Comply with worker safety training
• Designate a manager for business insurance claims
• Ensure insurance compliance every single year

Pre-incident checklists for staff

Before an incident even occurs, staff should be trained and prepared. Here is an example pre-incident checklist:

• Verify receipts, contracts, licenses, and leases are stored both physically and digitally
• Conduct regular company safety inspections (e.g. check smoke alarms, fire extinguishers, exits, first aid kits)
• Ensure proper, routine maintenance of machinery and equipment
• Train employees on what to do in case of data breaches, theft, fire, injury, or terrorism

Case Studies & Worst Business Insurance Mistakes

Business insurance is a financial safety net for all kinds of business risks. It is crucial for any risk mitigation strategy since it can prevent catastrophic financial loss and bankruptcy. However, you need to have the right insurance policies. The wrong coverage will look great but come with too many exclusions to be functional in a real crisis. You also don’t want to be fighting with your insurance company about the validity of a claim for years, because that would be a resource and money drain.

Here are things you should avoid when filing a business insurance claim:

• Waiting weeks to notify your insurance company of the incident because you want to gather more details
• The company didn’t keep full receipts of property and expenses
• Making things up or hiding facts to make the claim more serious than it seems
• Throwing away damaged property because it seems like trash now
• Admitting liability to third parties without legal counsel
• Thinking filing deadlines are just a suggestion

Example of a fast-approved property damage claim due to excellent documentation.

Conclusion

For business insurance claims, you generally need to follow these guidelines:

• Store all receipts, licenses, and important documentation
• At least 1 company point person who manages claims
• Notify your insurance of new incidents within 24 hours
• File the claim promptly (<30 days usually)
• Organize all insurance deadlines and communications

Being proactive about insurance claims before, during, and after filing ensures faster claim approvals and fewer insurance disputes. Choose the best business insurance for smooth claims processes today.