Commercial Property Insurance Claims

When business owners need to make a commercial property insurance claim, they are forced to learn how insurance works, what is covered, what is excluded, and how to document and prove their claim — all while trying to keep a business going.

It’s important for a business to fully understand all of the coverages available or limited by its insurance policy and not just take the insurance adjuster’s word for how the policy works. You could lose out on what you deserve if you don’t fully understand your policy.

Pinellas insurance lawyer reviews commercial property insurance claim

What does commercial property insurance do?

Commercial property insurance is one element of a business owner’s policy. It helps a business bring its property back to where it was pre-damage. This can involve repairs when a property is partially damaged or a complete replacement in the event of a total loss. Each insurance policy is different with its own language, deductibles, conditions, limitations, and exclusions.

Some commercial policies have additional coverage for things like law and ordinance, which will cover costs related to bringing a damaged building into compliance with the current building code. Other policies have lower limits for certain parts of a loss — for instance, some policies only provide a limited amount of coverage for damage caused by water or mold.

Understanding your commercial insurance policy

Almost every business has insurance. But, most business owners don’t really get to know their insurance policies until they are in the middle of the claim process. Along with figuring out if the insurance adjuster is being honest about how the policy works, business owners are also trying to learn about all of the different parts of the policy: what limits are available, what is excluded, how deductibles work, and what kind of documentation is needed.

Commercial policies are dense and full of endorsements; they definitely are not all the same. Our lawyers look at policies regularly as we defend businesses against their insurance companies and we still need to review each policy individually to capture the nuances of each one. Courts will also interpret various policy provisions differently.

What’s in your commercial insurance policy?

Here are the key elements to help you understand your policy as you read through it:

This is also called the “declarations sheet” or “dec page” or just “declarations” for short. This is the part of your policy that lists out in summary form the insured locations, the types of coverage that you have available, the limits, the amount of premium you paid, and the form numbers for the different forms that make up your policy. The declarations are a very important part of your policy, but they are not your whole policy — you have to look at the many forms attached to the declarations to figure out the whole story about your policy.
The addresses that are covered by the policy. These are “scheduled” (i.e. listed) in the declarations.
Endorsements are policy forms that change parts of your policy. An endorsement might add or take away something, or might substitute in a new language.
This is the timeframe when the policy provides you with coverage. The damage to your commercial property has to happen during the policy period for there to be coverage.
This is coverage for the actual building — the walls, floors, roof, etc. that make up the structure along with all the fixtures attached to it.
Sometimes called “BPP” or “contents.” This is your stuff that isn’t attached to your building, like furniture or supplies. If you’re a tenant and don’t own your building, business personal property can include improvements to the building that you performed (called “tenant improvements and betterments”) or parts of the building for which you are responsible under the lease.
Also called “other structures.” These are buildings on your land that aren’t physically connected to your main building, for example, a detached garage.
The goods that you sell as part of your business. Some policies cover these differently than business personal property.
Property that belongs to other people or businesses, but is located at your business property. There is usually a lower limit for the property of others than for other types of property.
The types of property that are not covered by the policy. This varies from policy-to-policy, but can include things like sidewalks, vehicles, boats, and animals.
Insurance that covers lost profit and ongoing expenses (like payroll or rent) while business has been interrupted because of a loss.
The amount of time for which insurance will pay for business interruption. It begins after the waiting period listed in your policy (often 72 hours) and ends when repairs “should” be complete or when business resumes at a new permanent location.
Insurance coverage that pays for expenses you incur to get your business back up and running and reduce your business interruption loss. This can be things like making temporary repairs or moving into a new location.
Coverage that pays for goods that spoil, usually because of damage to the building. This is important coverage for businesses in the food industry.
Insurance that pays for lost rental income when a loss makes it impossible to rent out a building.
Mold, fungus, or mildew grows in buildings after there has been water or moisture intrusion. Policies often exclude or limit coverage for mold.
When the insurance company pays you for a claim, it subtracts the deductible from the amount it will pay you. So, if your claim is valued at $100,000 and your deductible is $1,000, the insurance company will pay you $99,000. Unlike health insurance deductibles, you don’t have to pay your deductible to anyone, it’s just money you don’t receive from your insurance company.
Also called a “windstorm deductible” or a “named storm deductible” or a “wind deductible.” This deductible is usually larger than the normal deductible and often is a percentage of your policy limit. It only applies though to damage caused by a windstorm or hurricane or other named storm, depending on how the policy is written.
Coverage that pays for additional costs of construction incurred because of building code or other laws.
Coverage for the business’s signs, usually subject to their own lower limit.
Things that protect the property from losses, like smoke detectors, fire alarms, burglar alarms, cooking hoods, or a sprinkler system. Some policies require protective safeguards to be operational for there to be coverage.
A “peril” is something that can damage your property. The insurance company will only pay for damage caused by “perils insured against.” In some policies, there is a list naming the specific “perils” that will be paid for. In most policies, the “perils insured against” include everything bad that could happen to your property other than those perils that are excluded.
An exclusion is language in your policy that says what the insurance company will not pay for. If something is “excluded” it is not covered by your policy.
Sometimes called a “sub-limit.” This sets the maximum amount that the insurance company will pay for a certain type of property or a certain type of damage. Limitations are usually found inside the policy forms and not fully set out in the declarations.
The section of your policy that talks about how the claim process works. It explains timing requirements, your obligations to the insurance company, and the insurance company’s obligations to you.
Your services like power, water, gas, or communications. Some policies provide coverage for losses caused by interruption of utility services, some policies exclude coverage for these types of losses.
The part of your policy that tells you what you have to do during a claim.
Part of the policy that can reduce the total amount you get paid for a loss if your property is underinsured.
The condition in the policy that explains how and when the insurance company will pay claims.
Conditions of the policy that change what is covered or exclude coverage completely if a building is completely empty or if the business doesn’t occupy the building.
A policy condition that automatically increases your limits every year.
Shortened to “RCV.” This is the cost to actually replace a damaged item with a like kind and like quality item. For instance, the RCV of a damaged roof would be the cost of installing a new roof.
Shortened to “ACV.” This is the “market value” of a damaged item. The ACV is the value arrived at after an item is depreciated. A 20-year-old roof will have a lower Actual Cash Value than a brand new roof because of depreciation.

The better you understand your policy, the better decisions you’ll make about your claim and about your coverage in general. But Google will only get you so far. If you think your insurance company is misinterpreting your policy or you’re just not sure what to think, don’t hesitate to reach out to our law firm. We provide free case evaluations and our insurance law experts will tell you what they think about your claim and policy. We tend to do a better job explaining insurance than the adjuster will.

Additional policies and coverages

Couple diligently filing their insurance claim to avoid mistakes

Business interruption insurance

If business interruption insurance coverage is purchased, commercial policies cover business interruption, which are financial losses caused by a business being shut down because of a loss to the business’s property. Business interruption insurance will usually pay for lost profits and operating expenses that continue even while the business is shut down. This can include ongoing costs like payroll or rent.

Many business interruption insurance policies also cover “extra expense,” which means the extra costs incurred by the business to get back up and running faster. Extra expenses include things like money paid to expedite repairs or the cost of moving to a temporary location to maintain business.

Depending on the policy, there may be coverage for losses caused by the government (called a “civil authority” in insurance policies) blocking access to a property. This happens at times when an area has been evacuated or shut down because of a dangerous condition or catastrophic damage. Business policies can also provide coverage for income lost because utility services were disrupted, such as the loss of power to the insured building.

Business interruption coverage can be subject to waiting periods (usually some number of days before the insurance company has to start paying) and can be subject to maximum amounts that will be paid. Sometimes insurance companies will try to apply lower limits based on the type of loss. Some policies also will have blanket limits that apply to all locations where other policies might have individual limits for each of the business’s locations. If the different locations are all part of an interconnected business, there can be significant legal issues on whether the policy should pay for lost income at each property.

Every policy is unique, but no matter what the policy says, it is important to collect the right financial information and other evidence to document a business interruption loss.

Case Results

See More Case Results

Underpaid Commercial Insurance Claim

Hurricane winds damaged our client’s apartment complex, causing roof damage and interior water damage.  The insurance company paid $100,000, which was not enough money to cover the cost of repairs.  We filed a lawsuit against the insurance company and recovered an additional $228,000 for our client, bringing the total payment up to $328,000.  This allowed our client to fully repair the storm damage.

Initial Position

Underpaid

$228,000.00

Underpaid Commercial Fire Loss

A fire damaged our client’s restaurant, destroying equipment and causing smoke and heat damage.  The insurance company only paid $10,000, despite evidence of significantly worse damage.  The restaurant owners hired our law firm and we were able to recover an additional $170,000 from the insurance company.

Initial Position

Underpaid

$170,000.00

Coverage for lost rent

Where a commercial property owner is a landlord renting out a commercial building, that owner can buy an insurance policy that covers the loss of rents when a tenant is forced out by damage to the property.

Contingent business interruption coverage

A contingent business interruption is a loss of business income caused by a loss experienced by another company or person. This type of insurance provides coverage for a loss of contingent business income. Businesses that are part of a supply chain that require other companies to be in operation. These types of policies usually require there to be a direct relationship between the insured business and the other integral business that sustains damage, and sometimes those other integral businesses have to be scheduled (listed) in the policy.

Outdoor sign coverage

Commercial insurance policies will often limit or exclude coverage for outdoor signs, such as marquees or digital display signs. This coverage can be purchased, with the specific limits matching the value of the signs.

Builder’s risk insurance

Businesses that are having a structure built or renovated can purchase builder’s risk insurance. This type of coverage protects a company against the risk of losing building materials, fixtures, or other equipment during construction.

Fine arts coverage

Businesses that own fine arts can buy insurance that covers damage or loss to its art. Without this coverage a commercial insurance policy might not cover art or might limit the coverage to a specific maximum dollar amount.

Electronic data coverage

A breach or loss of data can cripple a business or cause significant financial losses. Insurance is available for losses resulting from electronic data destruction or losses.

Employee theft or dishonesty

By default, a lot of policies will not fully cover losses caused by a business’s own employees. Business owners can purchase additional coverage to protect against losses caused by employees’ dishonesty. This can include the theft of property, stock, or money.

Spoilage or contamination coverage

Food industry businesses can experience serious losses if any food spoils or becomes contaminated. This can occur because of damage to refrigeration equipment or utilities, which leaves stored food outside of the safe temperature range. Businesses like restaurants, food storage services, grocery stores, or food producers all may need spoilage or contamination coverage.

Mechanical breakdown insurance coverage

Some businesses rely on machinery or equipment to run their business, such as manufacturers or companies that rely on refrigeration. If there’s a breakdown in key equipment, it can completely shut down the business and cause a significant income loss. This type of coverage can protect against those losses.

Coverage for money, valuable papers and securities

Businesses can add coverage to their commercial property insurance policy for losses of money, other valuable papers, or securities. Depending on the wording of the policy, this can cover cash or other valuable paper lost on the premises (whether stolen or destroyed), a loss at a bank, or a loss during transport.

Newly acquired or constructed property coverage

As businesses expand, they may build or buy other properties. With this on their policy, businesses can extend existing coverage to a new property. Newly Acquired Property Coverage is usually temporary, and is meant to protect a business from a loss while it lines up long term insurance coverage.

Leased equipment coverage

Businesses that lease or rent equipment may need leased equipment coverage to protect them and the lessors of the equipment. Often, this type of insurance is required to rent the equipment in the first place. Leased equipment coverage can protect the business owner from having to repay the rental company in the event of a loss.

Coverage for outdoor property and landscaping

Many businesses maintain outdoor property like fences, signs, and landscaping. Businesses can buy coverage for outdoor property, which is usually set a specific dollar figure as a maximum limit.

Underground storage tank coverage

For businesses that rely on underground storage tanks, like gas stations, it is important to make sure that those storage tanks are covered by their insurance policies. This may involve purchasing additional coverage for storage tanks and any fixtures that are attached to them.

Common commercial policy claims

Commercial property insurance policies insure against all kinds of losses. We have had clients whose commercial property was damaged by hurricane winds, which forced tenants out of their building until repairs were done. We have also seen commercial losses for fires, sinkholes, pipe breaks, water damage, termites, hail, and wind. Businesses can suffer losses from vandalism, or theft.

How to file a commercial insurance claim

Insurance policies often have instructions in them for how to submit an insurance claim, but it’s not always possible to find your policy while you’re in the middle of dealing with damage to your property.

Often, the fastest way to submit a claim is to call your insurance agent and ask if she can submit the claim for you or tell you how to submit it.

You can also use Google to find out how to submit a claim with your insurance company. For example, Nationwide has an online claim website.

How insurance companies handle claims

Once a claim is submitted the insurance company will typically assign an adjuster, who will come look at the insured property and talk to the business owner about the claim. Frequently, the adjuster will conduct a recorded statement of the business owner, and may ask for documents. In many commercial property insurance claims, the insurance company will hire experts of its own, including engineers, mold assessors, or forensic accountants.

Ultimately, the insurance company has to make a decision about the claim and it will do one of two things: accept coverage and pay some amount or deny coverage and pay nothing.

Cost of repair

Even when an insurance company accepts coverage, there is still often a problem with the insurance company not paying enough for the loss. Insurance adjusters will frequently underestimate the value of a loss and pay too little for a business to actually make the repairs it needs. Sometimes it’s easy to know when an insurance company is lowballing your business, like when there’s been a huge loss and the insurance company is only offering a few thousand dollars (we’ve seen it). Other times, you might just feel it’s too little.

When we fight an insurance company that underpaid an insurance claim, we use expert witnesses to estimate the cost of repairing damaged items and invoices for repairs that have been done.

Businesses should definitely be skeptical about whether the insurance payment is sufficient and should be extremely cautious about accepting any amount as a final settlement payment.

Bad faith

When insurance companies delay payments to businesses or wrongfully deny claims, it can cause the business to lose profits or even completely destroy the business. These bad faith actions by insurers can make it so that the available policy limits are no longer enough to restore the business to where it was before the loss. Insurance companies can be held liable for breaching their obligations to treat insureds with good faith, and the recoverable damages can exceed the policy limits available. Bad faith law requires policyholders to comply with very specific laws before a claim for bad faith damages can be made.

We understand how stressful this is. And we understand it’s even more stressful when the insurance company ultimately tries to get out of paying what it owes for the damages and losses.

What happens when your commercial property claim is denied?

When an insurance company denies your claim, it should be in writing. The denial letter should explain why the insurance company is denying the claim and explain where the insurance company is getting its facts and information from.

Insurance companies deny claims for many different reasons, some legitimate and some not. Broadly speaking, denials usually are issued when the insurance company believes that the cause of your damage is excluded under your policy.

A denial is not the end of the road. Insurance companies will sometimes reconsider their position and reopen and readjust a denied claim. Usually though, the only way to convince an insurance company to change its position on a denied claim is to fight the insurance company in court.

Fighting insurance companies

If your business has had its commercial insurance claim denied, underpaid, or delayed, don’t just accept it. We’re business owners too and our business is helping people fight their insurance companies. Our attorneys will provide you with a free consultation to talk about your claim and we will tell you if we think you have a case against your insurance company and how we suggest pursuing it.

Here’s how we can help

Image showing legal consultation process for commercial property insurance claims

  1. Tell us about your insurance claim.
  2. We’ll tell you how we evaluate your claim right away and for free.
  3. If we think we can help you recover more insurance money, we’ll make a plan of attack together.
  4. You’ll never pay out of pocket — we’ll only get paid out of the additional money we recover from the insurance company.

Fill out the case evaluation form or start a chat, and a lawyer will evaluate your case and reach out to you. Or you can also call us directly at (727) 821-3195.

Case Results

See More Case Results

Underpaid Commercial Insurance Claim

Hurricane winds damaged our client’s apartment complex, causing roof damage and interior water damage.  The insurance company paid $100,000, which was not enough money to cover the cost of repairs.  We filed a lawsuit against the insurance company and recovered an additional $228,000 for our client, bringing the total payment up to $328,000.  This allowed our client to fully repair the storm damage.

Initial Position

Underpaid

$228,000.00

Underpaid Commercial Fire Loss

A fire damaged our client’s restaurant, destroying equipment and causing smoke and heat damage.  The insurance company only paid $10,000, despite evidence of significantly worse damage.  The restaurant owners hired our law firm and we were able to recover an additional $170,000 from the insurance company.

Initial Position

Underpaid

$170,000.00

Call us today for a Free Case Evaluation

(727) 821-3195