How does the commercial insurance claims process work?

What is the commercial insurance claims process?

Here is a general step-by-step guide to the commercial insurance claims process:

1. File a police report. If someone damages your business or steals or vandalizes your business property, you should file a police report. This step may not be necessary for some claims, like weather damage.
2. Gather necessary documents. Depending on the type of loss, you may need documentation, such as receipts, photos, or videos of damaged inventory or equipment. You’ll likely need expense reports and sales information to support compensation reimbursement requests for business interruption claims.
3. Report your claim. Though timelines vary by insurance company and state, filing your claim as soon as possible after the event occurs is essential. Most insurance companies offer 24/7 claims reporting online, but you can also call or go to your agent’s office to report the claim. Have your contact information, policy number, type of loss, date and description of loss ready.
4. Work with your commercial insurance adjuster. The insurance adjuster is the person assigned to your claim who you will work with throughout the process to finalize the claim and receive a settlement. They will assess the damage and may request additional evidence to support your claim. Make sure to stay on top of communication by email or phone to ensure timely responses to avoid missing any deadlines.
5. Get repair or replacement estimates. Gather several estimates to repair or replace damaged items or buildings to submit to your claims adjuster. They will use the estimates to determine a settlement offer.
6. Start repairs and settle your claim. Once your adjuster has reviewed the estimates and you’ve agreed on a settlement offer, work with your contractor to start repairs or make purchases to replace damaged items.
7. Contact your attorney. If you can’t agree on a settlement, you feel the offer is too low, or your insurer denies your claim, it may be worth it to contact an attorney who specializes in your claim type to determine the next steps. 

When should you make a commercial insurance claim?

Vincent says it might make sense to pay out of pocket rather than file a commercial insurance claim if the cost is close to or less than your deductible. “But if the loss is significant, affects your ability to operate, or involves liability – like a customer injury – filing a claim is usually the right move,” he says.

Once you know you need to file a claim, do so as soon as possible. As mentioned earlier, most small business insurance companies offer multiple ways to file, including over the phone and online, many with 24/7 claims support to answer questions and help ensure a fast response.

How long does a business insurance claim take?

How long the business insurance claim process takes depends on several factors, including:

• The type of claim 
• How fast you provide all necessary documentation
• If supplementary documentation is needed
• The severity of the claim

“A straightforward property damage claim could be resolved in a few weeks, while a complex liability claim might take months,” says Mary Wells, vice president of strategic risk management services at The Mahoney Group, an insurance brokerage headquartered in Chandler, Arizona. She advises submitting everything to your insurance company as soon as possible and staying on top of communication to speed up the process.

“Your insurance policy will also outline the timeline that your insurance company has to accept [or] reject your claim, advise you if more information or time is needed, and timelines to pay your claim if accepted,” says Nishi Kothari, a partner at Brasher Law Firm, a bad faith insurance claims and commercial personal injury firm in Houston, Texas.  

State laws determine specific deadlines insurance companies have to meet in the commercial insurance claims process for initial contact after filing a claim and issuing coverage disclaimers and reservations of rights after proof of loss. For example, Arkansas, California, and Georgia require initial contact within 15 days of claim notification. States like Colorado, Illinois and Massachusetts, as well as Washington, D.C., don’t have a set number of days but require “reasonable promptness.”

The biggest mistakes small businesses make when filing a claim 

“The biggest pitfalls include waiting too long to file, not documenting the damage properly, misunderstanding what’s covered, and failing to mitigate further losses,” The Mahoney Group’s Wells says.

Attorney Nishi advises avoiding throwing away evidence — even if it’s trash — before the insurance company can inspect the damage. Don't make repairs that aren’t an immediate safety risk or necessary to prevent further damage, as it could cause your claim to be denied or specific damages to not be covered. 

She also reminds business owners to “keep track of expenses incurred relating to the claim,” such as cleaning supplies and materials like tarps or boards to prevent water leaks, trespassing, or further damage for a commercial property insurance claim.

Both experts agree that the most costly mistake they see with small business insurance claims is accepting the first offer or a low-ball offer without questioning if the amount adequately covers the loss. 

What to do when your claim is denied

A claim denial can be frustrating, but you likely have recourse.

“You have the right to demand a re-inspection, ask for reconsideration or even appeal the claims decision,” Kothari says. You will have to gather documentation to appeal the denial and prove your claim is legitimate and should be approved and paid. 

Here are some action steps to take, whether a commercial property insurance claim or another type of commercial claim has been denied:

1. Request a written explanation. Your insurance company must provide written proof of why it denied your claim, which you can use to determine if it was made in bad faith or justifiable.
2. Gather additional evidence. You might receive a denial even though your claim is valid. Provide additional documentation, such as financial records, insurance company correspondence, receipts or third-party repair estimates, to substantiate your request for reconsideration or appeal.
3. File an appeal. Review your business insurance policy to determine the insurance company’s formal appeals process. Submit the appeal with the supporting documentation you gathered.
4. Seek legal assistance if necessary. If your claim is denied or remains unpaid after the appeal, it may be worth discussing your options with a public insurance adjuster or lawyer specializing in your claim type to determine what other remedies you can seek to get fair compensation.

Helpful tips for the commercial insurance claims process

These tips can help ensure a smooth commercial insurance claims process and give you the best chance of a successful settlement:

Understand your policy 

Your commercial insurance is key to protecting your business from financial loss. You should read your entire policy contract carefully and thoroughly to ensure it includes the coverage you need to protect your business. Ask your agent questions if you don’t understand something. 

Pay particular attention to exclusions, limitations, and policy limits to know what’s covered and what isn’t and how much coverage you have available for the claim. For example, a commercial property insurance policy covers business equipment, machinery, buildings and other property assets. But it usually doesn’t cover employee injuries, goods in transit, building foundations or damaged customer property.

Many commercial insurance policies are customizable, allowing small business owners to tailor coverage to their unique needs and risk profile. It’s a good idea to review your policies annually and check with your insurance agent to ensure your coverage is still sufficient as your business grows.

Maintain up-to-date and detailed records

When faced with a commercial insurance claim, the last thing you want to do is sift through documents and records to ensure you receive adequate compensation.

Make sure you have up-to-date records you can easily access in case of a loss, such as:

• Financial records (tax returns, profit and loss statements, balance sheets, etc.)
• Revenue and sales records
• Business inventory (receipts, photos, serial numbers, appraisals, etc.)
• Number of employees and compensation 
• Company expenses

Fire or water damage could destroy paper records, complicating the claims process. To ensure easy access when you need them, back them up digitally on the cloud or in a water- and fireproof safe.

Document the damage thoroughly

Your claim will go faster and smoother with plenty of documentation as evidence of your loss. Don’t throw anything away until your insurance company has had time to see it. Take photos and videos of all the damage and keep detailed records, including receipts, photos, and video, of all temporary repairs you make to prevent further damage.

Get several contractor quotes

Although most insurers have a preferred network of vendors you can access, you also have the right to use any contractor you’d like. Just like you should compare commercial insurance quotes and policies from multiple companies, you should also consider getting multiple contractor quotes to ensure the best quality repairs and service.

Using your insurer’s preferred network may come with perks, such as top priority for repairs and limited lifetime repair guarantees.

Pay attention to the claims timeline

Insurance companies typically have a timeline to follow once a claim is submitted. It’s essential to understand your insurer’s expectations and the deadlines to meet. You could miss out on compensation or receive a denial if you miss a deadline.

For example, adjusters typically have you sign a sworn proof of loss statement detailing the cause of loss and other pertinent details. You usually have 60 days to sign it. Signing sooner rather than later can speed up the claims process, but missing the deadline could halt your claim or cause costly issues.

What our expert says

What can a small business owner do if a claim is denied?

Nishi Kothari A partner at Brasher Law Firm

"You have the right to demand a re-inspection, ask for reconsideration or even appeal the claims decision."

How long does it usually take to settle a claim?

Mary Wells Vice president of strategic risk management services at The Mahoney Group

"A straightforward property damage claim could be resolved in a few weeks, while a complex liability claim might take months."

Why is it important for small business owners to understand the claims process?

Chris Vincent A partner at The Mahoney Group and leader of its construction practice

"Knowing the claims process helps you act quickly, avoid mistakes, and get back to business with minimal disruption. It also ensures you’re prepared to provide the right documentation and avoid unnecessary delays."