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Business interruption insurance can provide much-needed protection for companies during challenging times. The National Association of Insurance Commissioners (NAIC) explains that business interruption coverage is a type of insurance that lets companies cover certain fixed expenses while their premises are closed for repairs or otherwise disrupted due to a covered peril.
Unfortunately, some companies struggle to get their business interruption benefits from their employer. This raises an important question: What do I do if my business interruption claim is denied? The short answer is that you need to get ready to appeal. Here, our New Orleans business interruption lawyers explain the most important things that you need to do if your claim is denied.
Business Interruption Claim Denied: Know the Steps to Take
Step #1: Review and Preserve the Denial Letter
In most cases, insurance companies will—and are required to—send a formal denial letter to reject a business interruption claim. With this in mind, the first step to take after receiving a denial of your business interruption claim is to thoroughly review and preserve it. Your denial letter is the foundational document that outlines the insurer’s reasons for denying your claim. It can be crucial for identifying their reasoning, determining if there are misunderstandings, and proactively resolving any errors. Carefully reading the letter allows you to understand any of the specific policy provisions cited and it prepares you to address them head on. Preserving the letter ensures you have an official record of the denial. You will want that copy to show to your lawyer in the future.
Step #2: Gather and Organize All Supporting Evidence
Evidence is the key to a successful appeal of a business interruption denial. Indeed, collecting and organizing all relevant documentation is absolutely essential for building a strong case. You need evidence that proves that your claim is covered and you need evidence that proves the extent of your covered losses. Some of the most common financial records are profit and loss statements, tax returns, and sales receipts.
You should also gather any correspondence with the insurer and copies of your insurance policy.
Well-organized evidence can make it easier to bring a winning appeal. For example, imagine a cafe owner in New Orleans had their business interruption claims denied for failure to prove their losses. By chronologically organizing monthly revenue reports, they can create a clear timeline of the impact of a natural disaster on their business.
Step #3: Consult With a Business Interruption Denial Attorney
Business interruption claims can be challenging—especially if the insurance company has already moved to deny, delay, or underpay benefits. You do not have to take on the claims process all alone.
Seeking advice from a legal professional experienced in business interruption claims can make the difference for your claim. It can help you successfully navigate the appeals process. Along with other things, a top-rated New Orleans business interruption attorney can help interpret complex policy language, identify any bad-faith actions by the insurer, and advise on the best course of action. Even more importantly, your lawyer can also assist in preparing your appeal. A strong initial appeal can be the difference between getting your claim approval and facing another denial.
Step #4: Review Your Policy for the Appeals Process
Understanding your insurance policy’s specific procedures for appeals is essential. Policies often include time limits for filing an appeal and outline the required steps to follow. Reviewing these details ensures you comply with all procedural requirements. It can help to ensure that your appeal is not going to be dismissed on a mere technicality. It also helps you address any policy clauses that the insurer may have misinterpreted or overlooked.
Notably, many business interruption policies have relatively strict deadlines to initiate the appeals process. For example, you may have as little as 30 days after receiving the denial letter to start your appeal. It could be 60 days or 90 days. Either way, it is imperative that you take timely action as defined by the terms of your specific business interruption insurance policy. Do not miss your opportunity to challenge a denial of benefits.
Step #5: File a Formal Appeal with the Insurance Company
Filing a formal appeal involves submitting a detailed letter that addresses each reason for denial outlined by the insurer. Your appeal should include all supporting evidence, references to relevant policy provisions, and a clear explanation of why the denial is unfounded. Being precise and professional in your communication with the insurance provider will help to increase the chances of a successful result. It is always best to rely on an experienced attorney for help with your business interruption appeal. Your lawyer can make sure your appeal is filed properly. If you have any questions about the specific steps for filing a formal appeal with the insurance company—which usually starts with an administrative appeal—an attorney can help.
Step #6: Be Ready to Escalate the Claim if Not Resolved
The insurance company does not get to make the final decision on your business interruption benefits all on its own. A business interruption insurance policy is a type of contract. Insurers must live up to the terms of their contract. You can escalate the matter if your claim is denied a second time. The administrative appeals process is generally not the only available remedy. If your appeal does not result in a satisfactory resolution, you should be ready to take legal action. You may want to file a complaint with your state’s insurance regulatory agency. You may also have a lawsuit against the insurance company for an unjustified denial of your business interruption benefits.
Note: In some cases, policyholders (businesses) may be able to pursue a bad faith claim against an insurance company for the wrongful denial of a business interruption claim. Insurance companies are legally obligated to act in good faith and deal fairly with policyholders. When an insurer unreasonably denies a legitimate claim or fails to conduct a proper investigation, it may constitute bad faith. In such cases, additional damages beyond the original claim amount may be awarded.
Why Trust Insurance Claim HQ for Help With a Business Interruption Claim
The denial of your business interruption coverage can be stressful and frustrating and put a serious financial strain on your company. The good news is that a denial is not necessarily the end of the story. You have the right to file an appeal of your coverage. At Insurance Claim HQ, our firm is always prepared to go the extra mile to do right by business owners. With a proven record of case results and a commitment to maximizing the benefits of our clients, you can rely on our attorneys when it matters most. Business interruption denial consultations with our New Orleans attorneys are always free, completely confidential, and carry zero obligations.
Set Up Your Free Consultation With a New Orleans Business Interruption Insurance Lawyer
At Insurance Claim HQ, our New Orleans business interruption insurance attorney is always ready to go above and beyond to do right by clients. If you have any questions or concerns about challenging the denial of a business interruption claim, please do not hesitate to contact us today for a free, completely confidential case review. We handle business interruption claim denials in New Orleans and throughout the entire Gulf Coast region.