When a business suffers serious damage, getting a quick fix is crucial. Without it, the amount of lost business alone can end up being more than the original damage. Of course, that’s why businesses buy commercial insurance. It’s also why the failure of a business’s insurer to fulfill its obligations can be so devastating.
Unfortunately, many commercial casualties also involve large dollar amounts, giving the insurer an incentive to drag its feet. That may happen for several reasons:
- The insurer wants to keep its money as long as possible;
- The insurer hopes to exert pressure to induce a settlement on favorable terms; or
- The insurer is genuinely interested in making sure that everything is in order before it forks over that huge sum of money.
The first two put the insurer’s own financial interest ahead of the business’s legitimate interests under the policy and can form the basis for a bad faith claim.
Getting equipment, fixtures, and so forth back into use is vital. Getting compensation for the amount of lost business until that happens is equally vital. Denying the claim, delay in paying the claim, and paying less than it will take to make the business whole all make life miserable for a going commercial concern. And all may provide the basis for a claim of bad faith against the insurer if the motive for denial or the handling of the claim is improper. The sooner the facts get into the hands of experienced lawyers who know the ins and outs of both bad faith law and commercial insurance, the better off you will be.
Business Interruption Claims
The business interruption coverage can be particularly thorny given the inherent subjectivity of estimating how much business there would have been. But getting that money may be all that keeps the insured from going under.
In commercial policies that provide separate compensation for salaries and wages, any delay can prevent the business from paying staff, and paying staff may be all that keeps the staff from moving on.
When it comes to business interruption insurance, the majority of disputes center on accounting and financial data. Understandably, the insurance company is reluctant to simply accept the records and conclusions of the business’s accountants. Delays often occur when the insurer’s own accountants dispute the basis for the amount of the business interruption claim. However, if the insurance company is really operating in good faith, it will at a minimum work with you to expedite payment of the amount that the insurer doesn’t dispute. That usually allows the business to keep its head above water.
Simply recovering the amount that the insurer should have paid doesn’t necessarily make the business whole. Damages for bad faith in handling commercial insurance claims should include the amounts that the business lost because it did not have the insurance proceeds it should have had when it needed it. Figuring out what those losses are can be a very difficult process. In some cases, punitive damages and attorney fees may be recoverable. It helps tremendously to have the aid of attorneys who are highly experienced in these kinds of cases.
For example, one consequence of commercial insurance claim delays is the effect that may have on the ability of the business to arrange financing for rebuilding efforts and the like. So long as the insurance recovery is uncertain, lenders may be wary of advancing the funds the business needs, and the lack of financing may itself cause still more losses. Even if lenders do agree to finance rebuilding efforts, the uncertainty surrounding the insurance recovery may prompt the lender to charge a higher rate of interest.
If your commercial insurance claim has been denied or delayed for questionable reasons, call the team at Surrano Law Offices and tell us where things stand with your insurer and your business. We have decades of success in bad faith claims and we know how commercial insurance works. With offices located in the Phoenix area, we handle insurance bad faith claims throughout Arizona. We have fee arrangements for every need, including, in some cases, a contingency fee agreement. So, contact us today.