How to file a claim on your business insurance

When you buy insurance, you hope you’ll never need to use it. But sometimes, the unexpected happens and disaster strikes. At that point, you’re glad you had the foresight to buy insurance. But you also need to know how to file your insurance claim so that you don’t end up paying for damages you’d otherwise be covered for. 

Here’s what you need to know to file a claim on your business insurance policy.

1. Always report your insurance claim immediately – even if you think nothing may come of it. 

Your insurance company can provide you with guidance on filing your claim. They’ll tell you exactly what to do and how to document your claim. So calling them – or notifying them online - should be your first step. Plus, the faster you report your claim, the faster your claim can be filed, and the faster you can get the money you’re entitled to. That will get you back to work as soon as possible. 

“Get the loss reported as soon as you know,” advises Jason Kunert,  Vice President, Casualty and Allied Health Claims for Hiscox USA. “Don’t put your head in the sand. You don’t even have to wait until you know there’s a claim. If someone slips and falls in your store, even if they say they’re okay, that’s a good time to report the claim anyway. We can start a investigation, get the video surveillance footage from inside the store before it’s overwritten. By the time you get the letter from the lawyer, that footage may have already been overwritten.” 

Cyber insurance claims can be particularly time-sensitive. “Any time there is any indication of compromise whatsoever to your system, even if it’s not obvious, like a ransomware attack that shuts down the whole system, call immediately,” said Neel Desai, AVP and Team Manager, Cyber and Technology for Hiscox USA. “We have a cyber hotline, which is on the policy documents and on our website. You want to call that number right away, because our breach response experts will be right on it.”

Related: Claims made and reported insurance policies

2. Leave the evidence alone

If yours is a property damage claim, it’s tempting to try to start repairs right away so you can get back to work. Before you do that, though, make sure you photograph the evidence of the damage for your claim. And let the insurance company know what you’re going to do before you start – they can tell you exactly what documentation they need.

“If you have a property damage claim, don’t throw anything out,” said Kunert. “Don’t rip up the carpet because it’s damaged or throw out that copier that was flooded. Don’t get rid of any of that evidence until the insurance company has had a chance to look at it. Plus, your policy may cover the cost to have damaged items removed and disposed of.”

In the case of a cyber incident, you’re best off to let the insurance company and their experts handle it.  “The biggest problem I see is that someone who has a cyber incident thinks they have it under control through their IT team, and that they alone can work to resolve the issue without the need to file a claim or obtain insurance carrier assistance,” said Desai.

“Usually that causes more issues on the back end and further complicates the issue. Once there is an event that’s not reported quickly, then two or three weeks down the road, a further issue may arise, with the bad actors deploying ransomware or trying to compromise the email server because the threat was not more proactively addressed at the outset.”

3. Document everything you can

 If you are filing a claim, you’ll also want to keep records of any conversations or correspondence that might be pertinent to the claim. Take good notes if you have verbal conversations with another party regarding the claim. Even if something seems like it’s not important, it may become so later on. 

“If anything happens while you’re on the scene, take as many notes as you can about the conditions,  and about people who may have seen the incident. If there are witnesses, try to get a phone number or email address to provide to the insurance carrier,” said Kunert. 

4. Assess the damage

In the case of property damage, make a list of everything that was damaged, and how much it will cost to repair (if possible) or replace it. Keep track of any hours lost from work because of the incident. If you suspect a cyber incident, the damage may not be readily apparent. For example, if an employee tells you they clicked on a link in a suspicious email, the damage from that may not be obvious right away. But the cyber experts at your insurance company can determine if your system has been compromised. 

“Smaller businesses typically do not have a chief information security officer or a large IT team that can determine if a particular incident needs to be addressed,” said Desai. “They should absolutely be reporting that to the insurance carrier and letting us take a look at what happened.” 

5. Understand your policy

It’s helpful to understand your policy before you have a claim, but even if you wait until something happens, it’s not too late. Review your policy carefully to make sure you’re aware of any conditions, requirements or clauses that could affect your coverage. Your insurance company can help you to understand exactly what’s covered and what’s not. 

Your policy will also help you understand your responsibilities when it comes to processing your claim. It should outline what you need to do, and within what timeframe, in order for your claim to be processed. 

Related: What are deductibles, limits and endorsements?

6. Work with your insurance company

Stay in contact with your insurance company as you go through the process of filing your claim. Be sure to provide any information they ask for in a timely manner, and ask questions if you have them. What happens next? As you might expect, the time it takes to process and pay a claim depends a lot on the type and complexity of the claim. Here are a couple of examples.

A landscaper is mowing a customer’s lawn. There’s a rock in the grass and the lawnmower kicks it up and sends it through the customer’s plate glass window. The landscaper may call a glass company for an estimate right away, and then call the insurance company. According to Kunert, “In a case like this, there’s only one side to the story. The damage happened, no one’s disputing anything, so we just ask them to email us a picture of the damage and the estimate and we’ll send them a check. The whole thing might take a couple of days, start to finish.”

Suppose a business gets a ransomware demand. Their computer network is locked down, and they can’t get anything done. “In this case, it may take a week or two to determine if the data can be restored because it’s in the cloud or on a backup, or whether a ransom has to be negotiated,” said Desai. “This assumes that the claim is reported immediately, so we can act on it right away. Any delay will often extend the timeline and also complicate the recovery process, which can add to the cost.”

A more complex claim can require witness interviews and investigations, so it will take longer. Some claims, particularly professional liability (or E&O) claims may take several months, if a lawsuit is filed and goes to trial. 

If you have a Hiscox policy, you can report a claim online 24/7. A claims representative will contact you and walk you through the process. Once your claim has been reported, investigated, and paid, you’ll be glad you had the foresight to have a business insurance policy in place.