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When can an insurer deny a business’s property damage claim?

On Behalf of | Apr 24, 2024 | Insurance Law

When a business faces property damage, filing a claim with its insurer is often the first step to recovering losses. However, there are instances when insurers may deny such claims, leaving business owners puzzled and frustrated.

Understanding the circumstances under which an insurer can deny a property damage claim is necessary for business owners to navigate this complex process.

Failure to maintain coverage

Insurers expect businesses to maintain adequate coverage for their properties. If a business fails to keep up with their insurance premiums or lets their coverage lapse, the insurer may deny their claim for property damage.

Exclusions in the policy

Insurance policies typically contain specific exclusions that outline situations where coverage will not apply. These exclusions vary depending on the policy and insurer but commonly include damage caused by floods, earthquakes or intentional acts.

Misrepresentation or fraud

Insurers rely on accurate information provided by businesses when issuing policies and processing claims. If the insurance company suspects that the business is misrepresenting information, they may see fit to deny the claim.

Failure to notify in a timely manner

Timely notification of property damage allows insurers to assess the situation and process claims efficiently. If a business fails to notify its insurer promptly after discovering property damage, the insurer may deny the claim.

Property damage from disasters such as flooding, high winds and hail are among the most common causes for commercial insurance claims. It is entirely common to encounter a scenario in which you need to turn to insurance to help cover the costs of property damage, so it is important to prepare yourself by knowing why the insurance company might deny your claim.