When is a loss large enough or serious enough to report to your insurance company? Many insured people think, “It was only a minor loss—I don’t need to report this one, because it will be under my deductible and/or my insurance rates automatically will go up next year as a result.”
Unfortunately, situations that elicit a response like that can turn out to be the worst type of loss. For example, say that a person tripped and fell at the salon, but did not suffer any injuries and went home without another word. Then, months later, you are served with a lawsuit from that same person, who now is suing your business for medical expenses and lost wages incurred as a result of that fall. Then, when you finally call your insurance company to report the claim, you find out that it might not be covered because of late reporting. Ouch.
Insurance polices are two-party contracts with promises made by both the insured and the insurer. These contracts are set with some of the highest standards because they are based on good faith. You are promised coverage for a covered cause of loss in exchange for timely premium payment. However, the majority of insurance policies require you to promptly report any occurrence that may give rise to a claim.
Insurers have declined coverage due to late reporting because, by law, insurance companies have a contractual and statutory duty to investigate losses in a fair and timely manner. This investigation is how a claims adjustor determines where the liability lies, who is responsible and how it happened. Many times evidence will disappear if too much time has passed, and if your claims adjuster can’t determine who is liable, coverage may be declined.
In the long run, it is very important to promptly report any and all events that may give rise to claims. You may just save yourself some time, stress, and money—and isn’t that why you have insurance?
Jenny Bortman is an account executive for Phoenix-based Universal Insurance. For more information or to get a quick, no-obligation quote, call (800) 844-2101 or visit www.universalinsuranceltd.com.
