Small businesses depend on their insurance. When something goes wrong, the coverage lessens the blow, financially and personally. But what happens when a small business’ insurance claim is denied?
When an insurance carrier denies your business the coverage it owes you, it is failing its legal obligation to act in “good faith.” What is a small business owner supposed to do when they believe their insurance carrier is acting in “bad faith?” How do you challenge the decision? Should you involve an insurance bad faith attorney?
Let’s lay it out as simply as possible.
Be Proactive About Insurance Bad Faith
The first thing to do is recognize that the matter isn’t settled just because the insurance company denies the claim. Small businesses and their owners have several options when it comes to clearing up a denied claim. But before taking any steps, be sure to check your policy as soon as possible after the denied (or ignored) claim. It’s possible that the mistake is on your end: maybe you filed a claim for something that your policy doesn’t cover, or you filed too late after the event, or you didn’t provide all the necessary information when filing the claim. If any of these are the case then unfortunately, you’re on your own.
But assuming you’ve done everything right, the first step is to contact your insurance carrier about the denied claim. Sometimes, a short customer service call can fix a simple mistake or clear up a misunderstanding about a policy.
Talk to the State, or an Insurance Bad Faith Attorney
If the call doesn’t settle the issue, you’ve got a couple other options. First, you can file a complaint with your state’s Department of Insurance (they go by different names in each state). Most of these departments have websites where you can file a claim online. Keep in mind that if you are looking for quick or aggressive resolution to your claim denial, your state’s insurance department is probably not an ideal choice.
Alternatively, you can hire an insurance bad faith attorney. Most insurance bad faith attorneys will be happy to review the details of your claim and advise you on whether to pursue litigation or not. If they take the case, the insurance bad faith attorney will likely work for a contingency fee, meaning you pay them some percentage of the settlement amount if you win the case, and only pay for administrative costs if you lose.
Speaking with an insurance bad faith attorney is the quickest way to figure out how you should proceed when they have a serious dispute with their insurance carrier.