A couple looks over insurance papers

Insurance Coverage Disputes in Commercial Litigation

Insurance coverage is essential in any business. Smaller businesses, in particular, often start with a Business Owner’s Policy that provides blanket coverage for common occurrences like losses, property damage, and lawsuits.

Depending on the size and type of business you have, you might also carry insurance specifically for things like:

  • Product liability
  • Your property
  • Fire/Water damage
  • Commercial vehicles
  • Unemployment
  • Workers’ compensation
  • Disability
  • Equipment breakdowns
  • Business interruptions
  • Errors and omissions
  • Cybercrimes

Other types of coverage may pertain to your industry, operations, or region. 

While you may want to believe that having the right coverage will protect you against losses, there’s no guarantee that you won’t end up in disputes with your insurance providers. With that said, below are some of the most common types of disputes and ways to protect your business interests.

Types of Insurance Coverage Disputes

You might end up in a dispute over insurance payouts for various reasons, but perhaps the most common takes the form of a policy coverage dispute: Your provider claims that your insurance doesn’t cover the specific claim submitted.

For example, a commercial general liability policy typically covers consumer claims like bodily and personal injury, property damage, and advertising injury. It could pay for the cost of a lawsuit to fight these claims, including legal defense, settlement, and so on. However, it does not cover intentional damages, so if your insurer believes that a claim arose from your negligence or a reckless act, they may deny it. You would then have to fight them and prove why you deserve coverage.

Disputes concerning property damage are also common, as insurance providers may try to claim others were at fault or that the property wasn’t properly maintained. Excess liability claims could occur if damages exceed the amount covered by the policy.

Business interruptions can be expensive, so it’s a good idea to maintain coverage in case of events that halt operations and your ability to earn. Disputes can occur when the insurance provider claims you or someone else is at fault for an interruption.

You might also deal with underwriting disputes, whereby the insurer claims a pre-existing condition negates coverage. Beyond that, reinsurance issues can arise when your insurance provider transfers risk to another insurance company, potentially leading to more than one dispute over the same claim.  

How to Protect Your Business

While you can’t necessarily control whether an insurance provider disputes or denies a claim, there are steps you can take to protect your business interests. For starters, carefully consider the insurance providers and the coverage types you choose, emphasizing selecting reliable providers and comprehensive coverage if possible.

You should also keep detailed business records because, if a property damage dispute arises, having complete maintenance records could help your case. Additionally, if you’re involved in a lawsuit, you’ll need documentation like incident reports, police reports, witness statements, photos and video, and any records regarding costs.

Be prepared to get legal advice and support as well. Many insurance providers either have in-house counsel, retain outside firms to fight disputes, or both. Having an experienced lawyer on your side can make a big difference when fighting an insurance coverage dispute.

How to Handle Litigation

In the event that your claim ends up being litigated, it’s important to have a qualified commercial litigation attorney on your side. Some insurance providers will do anything and everything to avoid paying out on a claim, and an experienced lawyer can help fight for compensation and protect your interests.

If you are a business owner in the counties of Suffolk, Nassau, Westchester, and Rockland County, or in the five boroughs of New York, who requires a capable commercial litigation attorney, contact Kohan Law Group today to schedule a consultation.