5 Reasons Business Insurance Claims Are Rejected

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We give a lot of advice about providing the correct details to insurers, especially with recent changes to The Insurance Act, as it is vitally important in the event you need to make a claim. Here are some reasons claims may be rejected.

1. Underinsured Property

Unless you arrange sufficient insurance on your business property, you may only be able to claim for the average worth of your property under “the average clause”. So, if you underinsure your property by 50%, the final claim sum will be 50% less. Some businesses think that undervaluing will bring the price of a policy down – this is a truly false economy!

To determine the correct value of your business premises speak to your broker. They can help you understand the impact things like rebuilding costs, and debris removal can have on the final value.

2. Out of Date Details

Always notify your broker of any changes to business operations, even if it is as simple as buying in a new piece of equipment. Without updating details that affect the value of your business, or the risks within your business you could inadvertently invalidate your insurance – and you wouldn’t even know until you tried to make a claim! 

3. Failure To Report Historical Claims

It is essential to tell insurers about previous claims, as this affects your risk. If you don’t you could be seen as keeping information from your insurer – which may affect your claim.

4. Failure To Meet Insurance Conditions

Read your policy small print, it contains vital information about meeting your agreement with your insurance company. For example, your quote may have been based on the fact you have an alarm system installed (which minimizes risk of theft and vandalism), if you forget to turn it on and your business is subsequently burgled, your claim may be rejected.

5. Failure To Disclose Accurate Business Description

You should tell your insurer everything about your business and related activities, no matter how small. The Insurance Act 2015, which came into force in August 2016 states that Proposers should provide a Fair Presentation of their present knowledge before cover commences. Disclosure must be clear and accessible, and contain sufficient information to put an insurer on notice to make further enquiries. Without doing this, you could find that your claim will be rejected.