Business interruption insurance is a critical protection for those who will have expenses regardless of what their business does. Employee salaries and wages, supply contracts, mortgages or rental costs, utilities, and other business expenses continue to accrue even when your business has to temporarily close for one reason or another.
When that happens, business interruption insurance can provide the necessary capital to prevent your business from going into debt or failing outright because of a temporary issue. People sometimes need to make a claim against business interruption insurance after damage to their facilities because of inclement weather, interruptions in supply lines that make further production or sales impossible, and other unpredictable emergencies.
Paying those claims in accordance with the policy and in a timely manner is one of the obligations that insurance companies have to policyholders. Unfortunately, some of them will intentionally delay making payments on valid claims, a practice that falls under the umbrella of bad faith insurance.
Delayed claims could mean business failure
You don’t have the luxury of paying your premium three months after the insurance company demands it, and they don’t legally have the right to unnecessarily delay the payout of a valid claim. However, especially during times where claim levels are on the rise, insurance companies may look for any way to reduce how much they have to pay out to policyholders.
If you have already submitted the claim paperwork and necessary documentation establishing that your business qualifies under the terms of your policy, the insurance company should approve and pay your claim in a timely manner so that your business can cover its costs and prevent future financial hardship. If the insurance company won’t pay the claim quickly, you might not be able to pay rent, pay the premium on your insurance policy or continue paying your employees’ wages.
Delayed claim payment often constitutes bad faith insurance
Negotiating to pay less than the appropriate amount for a claim is one example of a bad faith insurance practice. Delaying payout in order to reduce the likelihood of a completed claim is another example.
Bad faith insurance involves a company intentionally refusing to pay claims that should have coverage according to the policy involved in the claim. Insurance companies engage in bad faith practices primarily for a profit motive, even though doing so may put them in violation of state and federal regulations regarding insurance practices. Delayed payout on interruption insurance, for example, could mean the business closes and no longer qualifies for an approved claim.
If you have faced an inappropriate and extended delay on the approval or payment of a business interruption insurance claim, you may have to take action against the insurance company involved to get the results that you and your business need.