Special Issues of Proof Facing Businesses Making a Commercial Coverage Claim

While businesses usually focus on property losses caused by fire, vandalism, intense storms, and other causes or incidents giving rise to liability claims, associated periods of business interruption can be just as costly if not even worse.  In many respects, losses incurred by a business under an insurance policy in Florida involves many of the same issues as a residential property damage policy  in terms of a commercial carrier’s duty to fully and fairly investigate and resolve the claim for the fair value of the loss.  However, the for-profit nature of businesses means that an insurance company will impose more substantial burdens and engage in shaper tactics when processing commercial claims.  The justification for this disparity in treatment is that businesses are expected to be savvier than an individual policyholder.

Although the property damage portion of a commercial claim might not differ substantially from that of an individual homeowner, the insurance company often attempts to have a business shoulder much of the work in investigating the nature of the loss and estimating the value of the claim, this investigation might entail hiring experts and/or gathering relevant information.  This approach can be improper given that insurance carriers have a non-delegable duty to pay the claim.

When a business encounters property loss or damage caused by a fire or other hazard, the business will often suffer a temporary downturn in generating income while the loss is addressed, so the company can resume normal operations.  Meticulous business records can prove invaluable to enable the business to substantiate the value of this aspect of the claim.  However, commercial carriers often exploit this legitimate aspect of documenting a claim as a way to create grief for the business. 

There are situations where proving lost revenue can be especially difficult.  When the business is fairly new and lacks an established pattern of income or the revenue fluctuates at various points in time, the insurance company often will attempt to exploit a paucity in evidence to mitigate liability to pay business interruption losses.  Companies facing these types of challenges can significantly improve their prospect of quantifying lost profits by using information and documents like inventory movement, contracts, sales trends, orders, and similar financial data.

When commercial carriers identify unusual circumstances or evidence a company was in financial trouble, the insurer will often treat this information as a red flag to justify a fraud investigation.  It is not uncommon for commercial carriers to treat losses incurred by a business through fraud or theft as evidence of a staged fraudulent scheme by the company.  Insurers routinely scrutinize evidence closely that might be used as fodder supporting allegations of fraud or misrepresentation involving the claim.  When a business faces these types of specious allegations, the company might have a valid claim for insurance bad faith.  The high stakes involved when a commercial insurance company relies on this strategy for refusing to pay a claim will make the claims dispute extremely contentious. 

Our Miami insurance claims law firm invites you to contact us if your insurance carrier is refusing to comply with its contractual obligation.  If you are an insured with questions about business insurance claims, you are invited to contact our law firm to speak to an experienced Miami insurance claims attorney.  My law firm specializes in representing policyholders in claims disputes in Miami and throughout Florida. Click here to read about some of our case results.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM. 

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