Gina Clausen Lozier, Partner, Berger Singerman, Boca Raton

Hurricane season is upon us and Berger Singerman's insurance team set out to see how Florida's business owners are prepared to handle an insurance claim. Turns out, they're not. Berger Singerman surveyed over 2,000 Florida business owners and found that 69% of respondents have not read their policy, 61% do not know their hurricane deductible and 64% do not know whether their policy covers code upgrades. These are all crucial in understanding the breadth of coverage available in the event of a loss.

It was also revealed that businesses have prioritized data backup and communicating emergency employee procedures over reviewing their coverage. The results of this survey are not surprising as business owners often come to us shocked at the deficiencies in their insurance coverage.

As a business owner, you expect that by paying your insurance policy premiums, your insurance company will promptly and properly adjust a claim and fully indemnify you for any damages sustained as the result of a loss. You may expect that this process will proceed with little time and involvement on behalf of you and your employees. You may even believe that you have no obligation to take any efforts to assist in the claim process. These expectations regarding the insurance claim process can result in a harsh reality check when suffering a loss and facing the substantial time and expense that comes along with proving your claim and complying with the insurance policy's post-loss obligations. The reality of the claim process often greatly differs from an insured's expectations.

An insurance policy operates as a contract between you and the insurance company and governs the parties' rights and obligations. While paying the policy premiums is the most recognized obligation of an insured, the policy sets forth numerous other conditions that a business owner must comply with in the event of a claim.

Certain obligations are automatically triggered upon the occurrence of a loss and are specifically described in the applicable policy forms and endorsements. First and foremost, you have an obligation to provide prompt notice of a loss. Oftentimes, a business owner may not realize the full impact of the claim on its business or believe that the damages fall below the policy's applicable deductible. You may expect that you have time to report the claim or that a delay in reporting will not impact your ability to secure coverage for your loss. Most insurance policy's do not provide a temporal requirement with respect to prompt reporting. Generally, notice should be given to the insurance company when it is reasonable for you to believe you would have an insurance claim arising from the damages. The failure to promptly report your claim can prejudice the insurance company and presents a real risk of precluding your ability to receive payment for your damages.

In addition to providing prompt notice of a claim, you also have an automatic duty to both protect the property from further damage and allow the insurance company the opportunity to view the damaged property. While these may appear mutually exclusive, it is important to balance these obligations with the need to protect your business and resume operations. If immediate repairs are necessary, document the repairs with videos and photographs and save any damaged contents for the insurance company's inspection.

You also have an obligation to keep an accurate record of repair expenses. Many business owners task their employees with post-loss cleanup and repairs following a loss. If your employees are going to take these actions on behalf of your business, keep records of all materials purchased as well as time sheets to substantiate overtime pay. Employee time and overtime costs could be recoverable under the terms of your policy.

If you comply with these obligations, you may expect that payment would immediately be forthcoming. The insurance policy, however, contains a myriad of additional obligations that are triggered upon the company's requests. These additional post-loss requirements could include numerous property inspections to an inspection of the business's financial books and records. The insurance company can also require a representative of your business to appear for an examination under oath in which the representative gives sworn testimony regarding the history of the business including responses to questions about the business's financial stability, officers, sales, profits, losses, operations, etc. The reality of complying with these obligations can be overwhelming in both time and expense for a business owner.

An insurance company's request for compliance with any of the policy's post loss obligations will be measured by reasonableness with the goal of attempting to balance an insurance company's legitimate interest in the claim against an insured's rights to both privacy and prompt payment of the loss. The expectation that you will have to expend little time or effort following a loss can be quickly shattered in the event that compliance is requested. It is crucial following a loss to know what obligations are automatically triggered, and those that are required upon the insurance company's request, to avoid prejudicing your right to recovery.

Gina Clausen Lozier is a partner in the Boca Raton office at Berger Singerman. She co-leads the firm's insurance team.