If your coverage came up short – or worse, was denied – don't panic. There are steps you can take to get answers and potentially recover your losses.
We have previously written about the importance of ensuring that your coverage is comprehensive and tailored to your specific needs. Unfortunately, sometimes you will end up in a situation where you are either denied coverage, or your coverage is accepted, but the coverage is much less than the value of the actual loss. This post is an overview of what to do if such a situation arises.
Contact your broker
The first step to take when your insurance is denied is contact your broker. You should ask them about the reasons for the shortfall or denial. In preparing for the meeting with the broker, you should ask yourself the following questions:
1. Was coverage for this loss available? If so, why was it not offered?
2. Was the coverage your broker offered adequately explained – including the repercussions of failing to purchase certain coverage? We have previously talked about the importance of ensuring that you understand the scope of your coverage.
3. Did the broker help guide you through the process of establishing the necessary coverage for a claim – including debris removal and code upgrades? Failing to include these in coverage can often lead to shortfalls.
4. Did your broker explain any coinsurance clauses in your policy? These may have significant impacts on what occurs when your coverage has a shortfall.
5. What steps did your broker take when discussing insurance with you? These discussions will, ideally, be documented by your broker, and you can ask for them. They may have relevant information about what requests you made, what coverage was offered but denied, and what types of coverage were or were not available4 at the time.
6. Did you disclose all the relevant details of your building? You have an obligation to disclose all material information to your broker, or else they can not properly assess your insurance needs. Did you miss anything when requesting a policy?
After asking yourself these questions, it is appropriate to speak to your broker about the claim. You should determine what you told your broker, what they advised you, what policies you requested, rejected, or were available to you but not offered. All of this will help paint a picture of who was responsible for the shortfall or lack of coverage. It could be that you forgot to request coverage for a loss – which is not the fault of the broker. It could be that you specifically requested detailed coverage, the broker confirmed that coverage, and then they failed to purchase the correct policy.
If you believe that the shortfall or denial was due to a broker's error, you may have a claim against your broker for negligence. If successful, such a claim can help make up the difference between your coverage and your loss.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
