The recent wildfires that have ravaged parts of Los Angeles have left behind a trail of destruction, affecting thousands of homes and businesses and causing unprecedented financial losses. As the flames continue to burn, the urgency for both businesses and homeowners to prepare and file insurance claims cannot be overstated. These insurance recoveries are vital for enabling affected individuals and entities to rebuild their lives and operations. By understanding and following specific steps, policyholders can preserve their rights and potentially maximize their insurance recoveries during such devastating times.
Locate All Relevant Insurance Policies
Finding and thoroughly examining all potentially relevant insurance policies is a crucial initial step in seeking compensation for a policyholder’s losses. Businesses are likely to rely on their first-party commercial property and business interruption policies, which might include property damage insurance, time element/business interruption insurance, and contingent time element/business interruption coverage.
Property Damage insurance typically covers physical loss or damage to business premises and other property owned or leased by the policyholder. This can include damages caused by natural disasters such as fire, wind, ice, snow, or water. Time Element/Business Interruption insurance refers to coverage for losses resulting from the inability to use damaged property for its normal operations. This may encompass loss of earnings or profits due to business interruptions caused by fire or other disasters. Similar to Time Element insurance, Contingent Time Element/Business Interruption coverage insures against business interruptions or extra expense losses caused by disruptions to a supplier, customer, or other party in the supply chain.
Furthermore, Extra Expense insurance covers additional expenses incurred in excess of regular operating costs. Service Interruption insurance generally provides coverage for damage to property and goods, as well as income losses caused by interruption of utility services. Ingress/Egress insurance pays for losses incurred when access to and from an insured property is prevented by physical damage, such as surrounding fire damage. Supply chain insurance may also offer additional coverage for disruptions.
Adhere to Notification, Proof of Loss, and Suit-Limitation Provisions
Identifying and complying with time-sensitive policy requirements is essential in maintaining rights under an insurance policy. For instance, insurance policies often mandate that an insured provide timely notice of a claim. The requirements for when and how notice or a claim must be given or filed vary between policies and states, necessitating a careful examination of the terms.
Notice of loss must often be given “as soon as practicable” to avoid jeopardizing the claim. Commercial property policies typically require a sworn proof of loss to be submitted within 60 to 90 days, although insurers may provide written extensions. It’s also vital to adhere to any suit-limitation clauses, which might dictate that any suits under the policy be filed within a specific timeframe, often one or two years after the inception of the loss.
Given these often-strict and time-sensitive requirements, it is advisable to involve insurance recovery counsel, brokers, and agents immediately to assist with claims. This ensures essential timelines are met and that the policyholder’s rights are preserved.
Record Damage and Keep Documentation
Assessing the full extent of loss and damage following a fire takes time. A business should start documenting and quantifying any damage or business interruptions as soon as possible. Homeowners should take similar steps when seeking compensation for their lost or damaged possessions and their extra expenses due to fire or other causes of loss.
Key actions include separating any damaged property from undamaged property to the extent possible and safe. Taking photographs and videos of the damage, including structural damage, affected objects, and the surrounding vicinity, is crucial for comprehensive documentation. It is also important to itemize damaged or lost items, noting their date of purchase and value, and collecting receipts to substantiate the claims.
Tracking extra or expediting expenses needed to continue business operations, such as costs of emergency gear and protective equipment, added freight charges for quicker delivery of emergency supplies, relocation costs, and advertising or notification costs, is also necessary. Other significant expenses might include costs associated with maintaining lost power, such as generators, and costs for impacted utilities like water. Overtime pay and additional labor costs incurred due to the fire should also be logged.
Collaborate with the Insurance Company
Many insurance policies require that the policyholder collaborate with the insurer’s investigation of a claim. Collaboration does not mean yielding to unreasonable requests by the insurer, but reasonable cooperation is generally required. This cooperation includes providing all necessary documentation and evidence to support the loss and ensuring that the insurance company can conduct its evaluations and investigations.
However, it’s important to recognize that cooperation has its limits—policyholders should not capitulate to requests that are irrelevant to the coverage determination or appear designed to limit or deny coverage. Maintaining transparency, communication, and mutual respect throughout the claims process can help ensure a smoother recovery process and enhance the validity of the claim.
Assemble a Skilled Team
The process involves documenting the damage accurately, promptly notifying your insurance provider, and being aware of the coverage details in your policy. Additionally, it’s crucial to keep records of all communication with your insurance company, seek assistance from public adjusters if necessary, and remain patient throughout the process. In these challenging times, being well-prepared and knowledgeable about how to handle insurance claims can make a significant difference in overcoming the aftermath of such disasters.
