Perhaps surprisingly, Florida businesses are subject to many of the same types of claims as Florida homeowners, but on a broader category basis. Most businesses share the same types of risks as a homeowner; they need to insure the building if they own it, improvements and betterments if they lease it, and business personal property such as office equipment, computers, telephone systems, furniture and inventory. Here, we cover some of the most common commercial claims.
First of all, businesses that own the buildings they operate from have the same natural disaster risk as Florida homeowners because they must also contend with hurricanes, tornados, hailstorms, and fires. The business personal property claims (contents) do not have sub-limits like a homeowner policy and can become significant when you take into consideration all of the business property that is insured. Businesses may suffer losses to business property and inventory that may be at the business or stored off-premises. Even if the business does not own the building, they will need to insure any improvements and betterments and in most cases the glass windows if they are in the retail space. Those businesses that ship inventory in owned delivery vehicles will also have the cargo risk as well as the vehicle.
Most business owners are not clear on the coinsurance requirement and how it can have a significant effect on the claims settlement process. Your public adjuster can examine your insurance contract and prepare you for any significant reductions in the claim payment as a result of a coinsurance penalty. Your adjust will know how to take this clause into consideration when adjusting your claim and determine if the insurance carrier is treating you fairly and also whether your agent informed you in a proper manner about how the coinsurance clause could affect your coverage. The basic formula for figuring your coinsurance requirement is as follows:
Did Have /Should Have = Coinsurance
This formula may look very confusing, but it is actually quite simple to apply. Every commercial property policy contains a coinsurance clause that dictates the minimum amount of insurance you must carry on a building. For example, if your property insurance policy requires 80% coinsurance, this means if you own a building with a replacement cost of $500,000, you must insure it for $400,000 (80%). If you have a fire and your building is a total loss, but you have insured it for only $350,000, your claim will be reduced because your building is underinsured.
Did Have $350,000 / Should Have $500,000 = 70%
Based on the coinsurance formula, your claim payment will be reduced by 10% because you did not insure the building for the proper amount. This is where the public adjuster will advocate for you and verify the actual replacement cost of the building and whether you were properly notified of your responsibility according to the coinsurance clause in the policy.
Business Interruption Claims
Most Commercial Package Policies provide coverage for business interruption. This is a very important coverage for any business, but can be a very tricky coverage when it comes to a claim. Always call a public adjuster to assist in filing this type of claim. What the coverage is supposed to do is reimburse you if you must temporarily or permanently move your business resulting from damage from a covered peril. With this coverage in place, your business will be able to recoup the costs of moving your business, loss of revenues while doing so, and take care of additional expenses you incur as a result of the move. In every case, your insurance carrier will demand accurate proof of your losses which translates into significant paperwork. Typically the policy will pay an amount toward the claim on a monthly basis, but that amount is determined by actual losses and additional expenses that you must prove. A public adjuster will be familiar with the type of proof you must provide and will assist you with gathering this information on a timely basis. Let’s use the following claim scenario as an example.”
You own a well-known restaurant and have built a very profitable business over time.
Because of an electrical fire, your building is severely damaged which causes you to
relocate your restaurant for six months while your building is being repaired. Your
business interruption coverage is triggered because the fire is a covered peril. The
insurance company is going to require you to submit proof of average revenues and
expense for prior years before they are willing to determine a monthly reimbursement
amount before they will commit to an amount of reimbursement. Your public adjuster
will assist with gathering the appropriate documents and then also make you aware of
expenses that you will incur but may not have considered. What about the loss of
revenue from customers who did not return because of your relocation? What about
additional expenses for revising and reprinting menus and advertising? What about the
additional expense of purchasing your entire list of food products and wine inventory?
These are the areas of your business that your public adjuster will be familiar with so that
you will be properly reimbursed and made whole again.
Certainly, you know your business better than anybody. However, when it comes to commercial losses and the ensuing claim process, a reputable and professional public adjuster will bring you through your claim and get you what you’re entitled to receive.