It is not uncommon for restaurants to suffer fire damage, and it is just as common for these claims to be underpaid by a commercial insurer. It is vital that restaurant owners purchase the right coverage, take steps to prevent damage, and otherwise protect their claims in order to recover as quickly as possible. Attorney Bill Voss explores the most common obstacles restaurant owners face when making fire damage claims.
Coverage Concerns That Can Affect Payment for Restaurant Fires
While you may want to clean up and reopen as quickly as possible after a fire, you should wait until you have filed a claim to perform anything other than necessary repairs. Your insurer should send an inspector out to your location in a timely manner, and you should not alter or destroy any evidence in the meantime. While you wait, it is a good idea to examine the specifics of your policy very carefully to ensure that you get all that you are owed.
Your policy is key to recovering from a fire. Depending on the terms of your coverage, your claim may be underpaid or denied due to:
- Insufficient fire coverage. There are many different types of commercial fire damage coverage, each with its own exclusions. Cooking equipment is the leading cause of fires in restaurants, but some bare-bones policies may only cover fires due to electrical malfunction or lightning strikes. Similarly, the policy that provided full coverage during construction may not cover you for losses during operation.
- Failure to perform responsibilities. Policyholders who do not hold up their end of their insurance agreements, including making timely claims and protecting the property against future losses, quickly see their claims denied. Claimants who have lied about the installation of fire suppression systems or fire safety training courses for staff may also have invalid claims—especially if they received discounts on their policies for fire prevention.
- Misreading the value of the policy. Many commercial policyholders assume they are fully covered for fire losses without taking into account whether their coverage includes recoverable depreciation. Without it, owners are only reimbursed for the actual cash value (ACV) of their losses, thousands less than the cost of replacing lost items.
- Overlooking add-on coverage. Restaurants suffer far more than property damage after a fire. They often remain closed for weeks or months while they are undergoing repairs, and must be up to current building codes when they reopen. Optional “extras” such as business income insurance can be used to pay chefs, servers, and other skilled employees to prevent them from leaving your employment, while ordinance upgrade coverage allows you to repair the structure to better-than-new condition.
If you are having trouble getting fair payment under your commercial fire policy, we can help. Simply fill out the form on this page today to contact the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.
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