You have a cleaning-related insurance claim? So now what?

Oh, the wonderful world of claims.  It’s what we prepare for that we hope never happens.  Even outside of the insurance world, think about how much time and effort we spend doing exactly that.  We vaccinate our children against dreadful diseases, we install security features in our homes, businesses and vehicles, those of us who live in storm-prone areas buy hurricane shutters and sandbags.  We wear our seatbelts, have our cars regularly serviced, and look both ways before crossing the street.

Sounds simple, doesn’t it.  Just avoid unsafe situations.  But what about the un-avoidable unfortunate situation?  We get a lot of questions about what happens next.  What if I turn in a claim?  Most common question:  “How much is this gonna cost me?”

Typically, commercial policies are not “surcharged” like your personal auto policy might be.  Premiums don’t go up because of a single small loss.  But if your loss occurs while washing an 8 story building, cleaning a kitchen exhaust system, or while doing something other than work that is allowable within the parameters of your insurance program, or the operations the carrier “intended” to insure, your policy may be subject to cancellation or nonrenewal for a change to or increase in risk exposure.

Multiple losses that indicate there may be an issue with safety procedures or employee training are another instance when underwriting may decide to discontinue coverage.

While surcharges are not usually applied to commercial policies due to loss, new policies are rated based on claim experience.  If you, for any reason, needed to purchase a new policy, your loss history would be taken into consideration for rating purposes and eligibility.   That could result in a significant increase in premium for your new policy.

So it’s simple, really.  Pay your premiums on time to keep your coverage in force continuously, and don’t do work that is not approved under your insurance program.

However, that isn’t the most important question you should be asking yourself (or your agent).  The best way to avoid financial devastation from a claim is to have the proper coverage to begin with.  So, do you have the protection you need?  Do you have coverage for damage that may occur to what you are washing?

The care, custody and control endorsement, also known as Broad Form Property Damage coverage, will pay for damages to “your work” for which the named insured is found to be legally liable, up to the $25,000 per occurrence limit/$25,000 aggregate.  There may be a deductible that will apply.  Our policies include a $500 property damage deductible.

Let’s say that during your work on a house, windows were damaged.  Will your insurance company buy your client brand new windows?  That depends.  If the windows were older or deteriorated to begin with, there may be depreciation assessed, because the principle of insurance is to indemnify the claimant or put them back in the same financial position as they were in prior to the loss.  The insurance company will not provide brand new windows for ones that were in less-than-new condition before the named insured got there.  But they will pay an adjusted amount, if you have the coverage that applies to this loss

What if someone says you did damage to their property when you didn’t?  Even if you have the safest equipment used by the best- trained workforce in the country, and you stridently supervise every aspect of every job, a claim can be made against you.  A claimant can say whatever they want to.    An unfortunate circumstance of what you do is that existing damage not visible on a dirty surface will become very obvious on a clean one.  Will your insurance company stand up for you?

If there is no coverage, there is no defense.  Let me say that again.  If there is no coverage . . . meaning the claim would not be paid if you were at fault, then your insurance company has no duty to defend you against a claim where you are not at fault.  You would be on your own.

The discretion whether to settle a claim or defend it lies solely with the insurance company.  But you want the backing of their investigative resources to which you wouldn’t have access yourself.

Insurance is that one valuable investment you want to tuck away and never have to use.  The true value of a good and appropriate insurance policy is the peace of mind you get from knowing it’ll be there if you need it.  Log on next month for our list of best practices to avoid finding yourself in a claims situation.  And call your agent today for a review of your insurance plan to make sure you are covered if something unavoidable occurs.