My insurance company denied my Business Loss claim – what can I do?

A policyholder has recourse against the insurance company in the form of a lawsuit. Insurance companies know that even though an insured individual can file a lawsuit at no upfront cost to the insured (i.e. a contingency based lawsuit), such lawsuits are time consuming. In many cases concerning widespread losses, insurance companies make a financial bet that their payout in the form of lawsuits would be less than if they honored their claims.

Business interruption insurance is, by definition, a first party claim. A “first party claim” involves a policy holder filing a claim against their own insurance company. This terminology differs when a claimant asks someone else’s insurance to cover a loss, which is called a “third-party claim” and often rises in the case of a vehicle collision.

Many states offer additional protection to first party claimants to prevent insurance companies from acting in “bad faith.” In the insurance context, “bad faith” means that the insurance company did not act fairly. Examples of “bad faith” can range from an insurance company misrepresenting the language in the policy to avoid paying a claim to unreasonable demands on the policyholder to prove a covered loss, and many circumstances in between. Upon a finding of “bad faith” it is not uncommon for a Court to award three times the amount of the insured’s damages against the insurance company and require the company to pay the insured’s attorney’s fees. Such practices are intended to keep insurance companies accountable.

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