There are several complex issues regarding business insurance that can result in disputes between the insurance company and the policyholder. These disputes often arise from minute details in a policy that are open to debate. And while every case is different, there are a few common issues that tend to cause disputes more often than others.
Business owners who are in the process of purchasing insurance would be wise to read about the common causes of commercial insurance disputes. If you are aware of some of the common issues that prompt disputes, it will be much easier for you, your attorney and your insurance provider to avoid them.
Extent of coverage
Insurers and policyholders frequently debate the extent of a policy’s coverage. A contract is supposed to clearly enumerate a policy’s coverage, but it is possible for both parties to interpret the limits of coverage completely differently. The insurer usually tries to limit coverage, while the policyholder wants as much coverage as possible.
Value of damages
Another common cause of insurance disputes is the value of a client’s damages. When a client has property or liability losses, they rely on their insurance provider to cover their losses. The insurer and policyholder might have different assessments of the policyholder’s damages.
Duty to defend
When another party sues a policyholder, the insurance provider has a duty to defend their client in court. This includes providing an attorney or covering the policyholder’s legal costs. In this situation, there is often a dispute about covered and non-covered charges regarding the defense.
Many disputes have arisen because of one party’s lack of communication with the other. For business owners, it can be incredibly frustrating when an insurance company does not communicate promptly. Having efficient communication can be crucial in avoiding disputes.
Sometimes, one of the parties might have an unreasonable expectation regarding the value of a claim. A policyholder might expect an unreasonably high payment; an insurer might make an unreasonably low offer. This can inspire a dispute that may need to be negotiated or litigated.