Now that Hurricane Irene is done pummeling the Eastern Seaboard, affected business owners will move on to the next phase: trying to figure out if insurance will cover their losses.
In the chaos that follows a natural disaster, mistakes can be made that may delay insurance reimbursement, or mean your insurance won't pay at all. Long delays can be deadly for a business trying to bounce back and get the doors open again.
Here are the top seven mistakes business owners make in filing insurance claims:
1. Not contacting your insurer immediately. Many people make the mistake of cleaning up damage before an insurance representative visits the business. This creates confusion about how bad things really were, and you may find that labor you did or paid for is disallowed if it preceded an insurer's inspection. In a disaster situation, many insurers have a quick-response team that will come out to survey the situation.
2. Not documenting the damage. Often, repairs must begin immediately to prevent additional damage, or equipment must be moved to a new location. If so, be sure to photograph the original scene to document how it was before you started your cleanup effort. Also take photos of any repairs you make.
3. Not keeping damaged goods. If your business cleanup includes removal of items such as water-damaged merchandise, flooring or insulation, keep it all, even if it has to pile up in the parking lot. The damaged materials are all evidence of the impact of the disaster on your business.
4. Not appealing your insurer's lowball estimate. Your insurer will give you a damage estimate after surveying your business. If you think it's too low, you can appeal. Hire your own adjuster to do a second estimate. Usually, an impartial, third-party mediator will then be employed to make a final decision on the payment amount.
5. Not reading your policy. It's a common myth that if you have insurance for a building, you must have coverage for flooding, earthquakes and all other possible calamities. But often, it's not true. In earthquake-prone states, for instance, this coverage often must be obtained on a separate policy or rider, and flood insurance is only offered through the National Flood Insurance Program. Don't waste time submitting claims to your private insurance policy if it won't cover you for the disaster you've just suffered.
6. Counting on FEMA for quick help. If your business is in a federally declared disaster area, federal aid will be available. But you can ask survivors of Hurricane Katrina how maddeningly slow this aid moves. It might provide homeowners with temporary shelter and eventual money to rebuild. But for a business owner, your private insurance will be your best chance at receiving money fast enough to reopen before all your customers drift away.
7. Not preparing ahead of time. Obviously, the aftermath of a disaster goes more smoothly if you are ready to swing into action when trouble hits. Start with reviewing your policy to make sure you have adequate coverage. Then be prepared. Do you know where your insurance policy is kept? Is it handy, where you could grab it if you had to leave suddenly? Is an extra copy in a safe deposit box where it would be safe from flooding or fire? Do you have your insurance agent's number programmed into your phone? It'll prevent delays if you have your information handy.