How Business Owners Can Avoid Costly Commercial Insurance Claim Mistakes
When disaster strikes your business, filing an insurance claim can help you get back on your feet.
Whether it’s a fire, burst pipe, theft, or storm damage, disasters throw your future into uncertainty.
Unfortunately, many business owners discover too late that a single mistake can destroy their commercial claim and threaten the future of their business.
Commercial claims are complex. Between exclusions, documentation requirements, and adjuster negotiations, there’s plenty of room for error.
Fortunately, with the right strategy and expert help, businesses can protect their bottom line.
Here are the most common commercial insurance claim mistakes – and how to avoid them.
1. Not Reading (or Understanding) Your Policy
Most business owners don’t fully understand their commercial property or business interruption coverage until a loss occurs. Unfortunately, that’s when surprises show up.
Policies often contain co-insurance clauses, depreciation formulas, and sub-limits that can dramatically affect your payout.
You might assume you’re covered for full replacement cost, only to discover your policy only pays actual cash value (ACV), reducing your claim significantly.
Or, you might learn your business interruption coverage excludes certain types of downtime.
Avoid this mistake by:
- Reviewing your policy before a loss occurs
- Understanding every word in your policy (remember: the future of your business depends on it)
- Asking your agent, insurer, or other expert (even ChatGPT) to explain anything you don’t understand
Consider hiring a public adjuster after a loss – they’ll interpret policy language and ensure you get everything you’re owed.
2. Failing to Document Damage Immediately
Insurers require detailed proof of loss. Without proper documentation, your claim’s value can plummet – or be denied completely.
Too often, business owners clean up quickly. They throw away damaged inventory or forget to take “before” photos. By the time the insurance company’s adjuster visits, much of the evidence is gone.
Avoid this mistake by:
- Taking extensive photos and videos from multiple angles before any cleanup
- Scanning the entire property – from structures to inventory – for damage
- Keeping receipts, invoices, and inventory lists for all damaged items
- Creating a timeline of events leading up to and following the damage
The more evidence you provide, the stronger your claim becomes.
3. Underestimating the True Scope of Damage
Insurance adjusters sent by the carrier work for the insurance company, not for you. Their job is to minimize the payout within the policy terms.
Many business owners assume the insurer’s adjuster is being fair, only to discover months later that critical repairs, hidden damage, and business interruption losses weren’t fully covered.
Avoid this mistake by:
- Hiring a licensed public adjuster to perform an independent inspection
- Ensuring your estimate includes hidden damage (like mold, structural issues, or electrical problems)
- Reviewing all repair and replacement estimates for accuracy and completeness
A public adjuster advocates for your best interest and helps ensure nothing is overlooked.
4. Accepting a Lowball Settlement Too Quickly
It’s tempting to accept the first offer – especially when your business is struggling to reopen. But rushing the process can leave tens or hundreds of thousands of dollars on the table.
Insurers know many policyholders are eager for fast payouts. They may present a quick settlement that seems fair – until you realize months later that it didn’t cover all your losses.
Avoid this mistake by:
- Not signing anything without reviewing the full estimate
- Comparing the insurer’s offer with your own independent estimate
- Consulting a public adjuster or attorney before agreeing to a final settlement
Once you accept and sign, you generally can’t open the claim. If you’re unsure if it’s the right time to sign, talk to an expert. You don’t want to regret signing and leave the insurer feeling victorious.
5. Overlooking Business Interruption Coverage
Business interruption coverage is – quite literally – a lifeline for your business after a disaster. It covers lost revenue, payroll, and operating expenses while you recover.
However, business interruption coverage is also one of the most misunderstood parts of commercial policies.
Many business owners don’t realize how to properly calculate or document lost income. Others miss filing deadlines or fail to connect their downtime directly to covered damage.
Avoid this mistake by:
- Starting to document the loss of income immediately after the event – as soon as your business is unable to make income normally, you should start documenting
- Tracking all expenses related to the interruption
- Working with a claims professional experienced in business interruption calculations
This coverage can make or break your financial recovery. Review your business interruption coverage and ensure you’re not leaving money on the table.
7. Handling the Claim Alone
As a business owner, you don’t have to handle your claim alone.
Business owners tend to be independent. But you’re probably not an insurance expert – and that’s okay. Many business owners go their whole career without a significant claim.
Here’s the thing: it’s easy to make mistakes when handling a commercial insurance claim. And with major claims involving your business, you can’t really afford to make a mistake.
Avoid this mistake by:
Working with a licensed public adjuster. Unlike insurance company adjusters, public adjusters work exclusively for policyholders. They help by:
- Reviewing your policy for maximum coverage
- Documenting and estimating damages
- Negotiating directly with the insurer
- Fighting for a fair and timely payout
Public adjusters also work on contingency, which means you only pay after you accept the final settlement. Plus, you only pay a fee based on the extra value the public adjuster brought to the claim. You win, the public adjuster gets paid for their services, and the insurer is held accountable.
Contact Ironside Claims today to schedule a free consultation. Discover how a licensed public adjuster can maximize your commercial insurance claim – and ensure your business isn’t leaving money on the table by making a big mistake.