What Small Business Insurance Claims are Okay to Make?

We’ve all seen those stories of outlandish claims that people and even companies make to their insurance providers. And some claims even become legendary. But when you’re looking for insurance for your small business, or as an entrepreneur, it can be tempting to see just how gullible your insurer can be. Here’s a piece of advice – insurers are not gullible and they can smell BS a mile away. That said, let’s take a look at what frames a reasonable claim to make on behalf of your business.

Does the claim cause damage to your business?

A good a place as any to start, events or incidents that cause property/physical damage or financial loss to your business are fair game for filing a claim. Depending on your plan, this could include events such as theft, equipment failure, fire, or loss of income. But the basic idea is that whatever the event, it sets your business back to lesser position, one in which you’re relying on insurance to make you whole again. 

Is the claim within reason for the damage that was done?

Some of the more common outlandish insurance claims are made because the person filing the claim doesn’t understand the intent of insurance. Insurance is not meant to be a lottery you can win any time you have an accident. Nor is it a chance to “get what you deserve” after a qualifying event.

So, this does not mean: if you spill coffee on your motherboard, you can get a bigger, better new super desk? Consider the ramifications of this event. What will a clear-headed adjuster think about your situation? Here are a few of the top-level questions they might ask you:

• Was it avoidable? You didn’t have to be drinking a full thermos of coffee while peering into the belly of your computer.
• Did it occur naturally? That spill looked more like an expert pour over the circuitry, VOIP phone system, and even the printer.
• Was it an accident? That guilty expression and full Amazon cart can be very telling.

Is your deductible worth the risk?

Another thing to think about is the effects that filing for a claim might make on your small business. You’ll want to take into account the cost of your deductible before making an official claim. After all, you may think the company van was worth $20,000, but the Blue Book might tell a different tale.

A good rule of thumb is if your deductible is more than 50% the cost of the item(s) insured, then it could be better to seek to repair it yourself. You might find a fix or repair gets you back on your feet for less than the cost of the deductible.

PRO TIP: Check to see what the limits of your deductible are, before making any claims.

Sometimes deductible limits can dictate that you have to spend the deductible for each qualifying event. This can add up to thousands of dollars out of your pocket in an event that affects multiple elements of your business. It is a good idea to review your plan with your agent before you have a need for the insurance, if you can.

Can this claim be filed under common sense?

I mentioned earlier about a clear-headed adjuster. The truth is, you can become jaded in a certain perspective when bills are piling up and business isn’t “as usual”. This does not mean it’s okay to get a hot head and fight denied claims that go outside the lines of reason.

If the event you are considering filing for came about because of a known maintenance issue you “kept meaning to get to,” you shouldn’t expect aid to come from your insurer. The same can be said for water-related issues that aren’t uncommon. Many insurer’s will exclude coverage for several water issues. In these instances, it might be best to just handle the expenses yourself.

There are other things to consider before filing your business insurance claim, such as the mark it makes on your account history; or the possibility that they might even deny coverage. But these can be discussed the next time you contact your provider to check on your deductible (like we told you to, remember?).

Don’t go down in history as one of the outlandish cases OR as one of the drowning businesses that avoided using their insurance. It’s a service you pay for, and should be added to your arsenal of business tools. But it does need to be handled with kid gloves if you are going to get the most out of it.

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This post was written by SMB Insurance