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Texas Commercial Liability Insurance Claims

When an insured Texas business suffers a covered loss, it can file a business insurance claim with its insurer to formally notify them of such a loss. Insurance claims are typically filed to cover legal defense costs arising from liability lawsuits for bodily injury, property damage, personal and advertising injury, medical expenses and payments made to treat an injured third party, or to cover legal fees.

The most common commercial liability claims in Texas are:

  • Commercial general liability insurance claims

  • Commercial auto liability claims

  • Bodily injury and property claims, which may or may not include medical payments

  • Professional liability claims (for professional services)

  • Small business owner’s policy claims

  • Liquor liability claims

  • Premises rented claims, and

  • Employee injuries (in high risk careers, such as oil exploration and construction business)

Business liability insurance claims can only be filed for incidents for which a business is legally responsible. The claim is filed along with the necessary evidence such as an inventory of other people’s property damaged or receipts of medical expenses, attorney fees, and court costs. For example, a delivery business would need to file a general liability claim for damage caused to a client’s property in the course of normal business operations. The insurer will investigate the claim once it receives it and reimburse the insured business or the injured third party if it (the insurer) accepts the claim.

How Do I File a Claim for Commercial Liability Insurance?

In commercial insurance the liability claim events typically can unfold in two ways:

  • Immediately and Definitely, or

  • At a later time and Possibly.

If the business’ employee gets into a car accident while at work and the accident is clearly at the fault of the employee - this commercial auto liability claim should be expected to come down immediately and definitely. The injured and/or damaged party usually needs to pay for medical expenses and repair or buy a new vehicle without much delay. As soon as you find out about such an immediate claim - notify your commercial insurance agent and the insurer, so they are ready for this claim to come through. The agent will help you navigate the claim with the insurer. Once the claim is processed by the insurer, it may be approved, rejected, or modified.

If an accident occurs and no claim or lawsuit is filed right away, it does not mean that one is not brewing in the background. In Texas, civil suits have a 2-year statute of limitations, which basically means that if someone wants to sue your business, they have 2 years to build the case before bringing it forward.

Take the following steps to file a business liability insurance claim in Texas:

  • As soon as the possible covered event occurs, notify your commercial liability insurance agent. Do not wait to be sued. The agent can help assess the possibility of being sued based on the event that took place and will further advise you if you should inform the insurer too

  • The agent helps compile the list of details, which will help expedite the claim if it comes down to it. Collect all the dates of events and conversations, names of the participants, contact information, and policy numbers.

  • The agent helps you figure out your portion of the claim - the deductible, so you can plan on having this money available if/when the claim is filed.

  • If/when your business gets sued for the recovery of suffered damages, inform the insurer immediately. Liability coverage pays for attorney fees and associated legal costs up to the policy limits. Speak with the insurer and get the legal protection in place.

  • Liability claims and lawsuits are typically: dismissed, settled, or jury-awarded.

Is a Claim a Bill in Business Liability Insurance?

Depending on the nature of the damages caused by a business and the extent of repairs required, a claim in business liability insurance can be a bill. This can mostly be seen in general liability claims. For instance, if a home improvement business in Texas damages a client's roof, the claim is the cost of repairing the roof, which invariably is a bill.

How Long Do I Have to File a Business Liability Insurance Claim in Texas?

A typical business liability insurance policy document in Texas will specify the length of time an insured business has to file a claim. However, filing claims as early as possible after a covered event is advisable. The statute of limitation for civil lawsuit cases is 2 years.

What Happens after I File a Claim with my Business Liability Insurance Company in Texas?

According to Chapter 542 of the Texas Insurance Code, a business insurance company must acknowledge receipt of a request within 15 days of filing a business liability claim and 35 days to pay it if approved. During this period, the insurer may send an adjuster to evaluate the extent of damage to other people’s property. Business owners or their representatives must provide assigned adjusters with details of the items damaged due to their business activities. Using the services of a knowledgeable commercial insurance agent when filing a business liability insurance claim is generally advised.

How Do Business Liability Insurance Companies Pay Out Claims in Texas?

Every business liability insurance claim in Texas has a specific payment process depending on the amount of the claim. Small claims are easy to review and usually require less time to complete. Hence, an injured party may get a payment check from the commercial insurer almost immediately after a small claim. Multiple checks over an extended period is typical with larger claims. For example, repairs to extensive damages to a client’s property caused by a business would most likely be paid in multiple tranches if repair works would go on for a long time.

Can a Business Liability Insurance Company Refuse to Pay a Claim?

Yes. If a commercial liability insurance provider in Texas suspects fraud in a filed claim, they may refuse to pay it. Such suspicions, however, will be investigated by an independent investigator, who will either corroborate or dismiss the provider's suspicions. Business liability insurance providers are required by the policy agreement to pay claims if there are no suspicions of fraud. During the claims assessment period, it is usual for insurance providers to meet with business owners or their representatives to establish a mutually acceptable amount to pay as claims.

Why Do Business Liability Insurance Companies Deny Insurance Claims?

If a business liability insurance provider in Texas suspects fraud or errors in a filed claim, they may deny it. They will also deny a claim if the damage suffered is not covered by a policy. Furthermore, if an insured business stops paying its business liability insurance premiums, the insurance provider may deny any claim filed in the event of an insurable peril.

How Much Does Business Liability Insurance Pay Out?

The amount a business liability insurance policy in Texas will payout for a claim depends on many factors, but it will not pay more than the policy limit. For instance, in the case of bodily injury by a client, the amount the insurer will pay out is the cost of bills incurred for medical treatment. It would also include the legal fees expended to settle liability claims made against the business. In the case of a customer’s property damage, how much the insurance will pay out is determined by the cost of repairing or replacing the damaged property.

If you are shopping for commercial liability quotes in TX, make sure that you have enough coverage to protect the business in case of a liability lawsuit.

What if my Insurance isn’t Paying Enough for my Claim?

If a business liability insurance policy in Texas is not paying enough for a claim, the business owner or representatives can engage the insurer to register their dissatisfaction. The insurer may have missed something and will make changes once they determine what was missed out. If the business representatives are still not satisfied, they can explore the following avenues to appeal the insurer's decision:

  • Ask for an appraisal - If included in the policy, an insured business owner or representatives can ask their insurer to activate the appraisal process. The process involves both parties (the insured business and the insurer) hiring separate appraisers while the appraisers appoint another appraiser to serve as a referee. The hired appraisers will each calculate the loss estimates and If they disagree, the umpire makes the final judgment, which the insured business and the insurer must accept

  • File a complaint - The business owner or their representatives can contact the Texas Department of Insurance’s Help Line at (800) 352-3439 to file a complaint if they have reasons to believe their insurer is not paying enough for their business liability insurance claim

How Long Can a Business Liability Insurance Company Investigate a Claim in Texas?

In Texas, a business liability insurance company has a maximum of 15 days to investigate a claim, after which it must approve or deny the claim. The period of investigation may be extended to 45 days if an insurer has sufficient reasons to do so.

How Can I Check the Status of my Business Liability Insurance Claim?

To check the status of a filed business liability insurance claim in Texas, the representatives of the business can do any of the following:

  • Contact the company’s licensed commercial insurance agent handling the claims process

  • Contact the insurer's claims department via a specialized phone line, website, or mobile app provided by the insurer

When not to File a Business Liability Insurance Claim?

There are certain situations when an insured business in Texas should not file a business liability insurance claim. Such instances include:

  1. If the incurred loss is less or slightly more than the deductible. Since insurers tend to increase premiums after insured business file claims, a business owner may bear such losses from out-of-pocket to avoid a premium increase

  2. If the business has filed multiple claims in the last few years, for example, two claims in three consecutive years. When a business files multiple insurance claims in a short time, an insurer would consider it high-risk and may increase the business liability insurance premium

  3. If the cause of the loss is not covered under the business liability insurance policy. For example, if a business only carries commercial general liability insurance, it cannot go on to file a claim for loss arising from a liability lawsuit for professional negligence

To have a better understanding of when not to file a business liability insurance claim in Texas, a business owner should engage the company's licensed Texas commercial insurance agent.