How to file an insurance claim for your small business

In this Article:

• Report your insurance claim immediately
• Leave the evidence alone
• Document everything
• Assess the damage
• Understand your policy
• Work with your insurance company

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 assigned to an adjuster, and the faster to the claim can be resolved. That will get you back to work as soon as possible.  

Reporting insurance claims after too much time has passed allows room for additional damages to be incurred on your property, which may not be related to the incident you’re reporting, which is what your insurance company will be willing to pay. The faster you report your incident, the faster your insurance paperwork will be filed, the insurance company can begin and finish its investigation, and the police can evaluate the situation if needed. Additionally, if your delay prejudices the insurance company’s review, the company may be able to deny your claim outright.  

“Get the loss reported as quickly as possible,” advises Mike Tolerico, Vice President of Property and Casualty Claims for Hiscox USA.  “The sooner the better – claims usually don’t get better as they age. You don’t even have to wait until something formal is presented by an injured party. If someone slips and falls in your store, even if they say they’re okay, that’s a good opportunity to report the claim anyway. Even at that early stage, our team can start an investigation, secure witness interviews, and, in many cases, obtain surveillance footage from inside the store before it’s overwritten. By the time you get the letter from the lawyer, some of the important details from the incident may have already been lost.”  

Cyber insurance claims can be particularly time sensitive. “The longer you wait, the more time a bad actor would have to be moving laterally through your system and causing havoc,” says Lisa Jaffee, Assistant Vice President for Cyber, Tech, Media and Crime Claims for Hiscox. “For cyber claims, we have a 24/7 hotline that goes right to a law firm that specializes in data breach response. If it appears that there has been some kind of breach incident or ransomware event, they can loop in forensics or other resources to consult about next steps. Hiscox will also assign an adjuster who will review the coverage and begin the claim process.”

Related: Claims made and reported insurance policies

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2. Leave the evidence alone

It can be tempting to pick up a hammer and make some quick repairs to your workspace so that you can get back to work. Before you take any steps to repair the damage to your property, make sure to photograph the evidence of this damage, so that you can use it as proof to back up your claim at a later date.  

“If you have a property damage claim, don’t throw anything out,” said Tolerico. “Don’t rip up the carpet because it’s damaged or throw out that copier that was water-logged. 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 for you.”

In the case of a cyber incident, you’re best off letting the insurance company and their experts handle it.  “Sometimes people will inadvertently erase data or erase logs on their system, or try to restore their files from a backup,” said Jaffee. “But doing those things can potentially destroy crucial evidence about the breach. So, it’s really important to speak with an expert first. We can help you move forward without destroying any information that may be needed for the investigation.”

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3. Document everything you can

 If you are filing a claim, 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.

“Incident reports and pictures are really important. If anything happens while you’re on the scene, take as many notes and pictures as you can of 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 Tolerico. “Details are quickly lost from memory after an incident, so the more you can document in the early stages, the better.”

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4. Assess the damage

In the case of property damage, make a list of everything that was damaged such as inventory and equipment, 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 your insurance company will engage for you can determine if your system has been compromised. When applicable, have an outside authority audit the damages to your property to be used as further support for your insurance claim.  

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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, for your claim to be processed.  

Understanding your policy will also keep you from incurring any costs that may not be covered under your policy. “With a cyber policy, we have approved vendors we trust to conduct forensics investigations and data restoration, for example. If you engage your own vendors and incur costs before you talk to us, those costs likely would not be covered,” said Jaffee.  

Insurance policies are not all made equal – be sure to examine yours to make sure you’re aware of any exclusions that could potentially limit the amount of coverage you receive.  

Related: What are deductibles, limits and endorsements?

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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.  

For example, suppose 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 Tolerico, “In a case like this, things are pretty straightforward. The damage clearly happened, and no one’s disputing how it occurred, so usually all it takes in that situation is to 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.”

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.  

Remember, property damage can happen to any small business owner. The best thing you can do to prepare your business is to have an insurance policy that covers potential future expenses and the know-how to use those policies to your advantage.

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.  

Don’t have business insurance yet? Get an instant quote, and your business could be covered today.  

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