What in the World is ‘Due Diligence’ ?

Many times business owners, corporate officers, or risk managers don’t hear the term, “due diligence and dispatch” until the end of their business interruption claim.  These four little words can have a big impact on your claim.  So what does ‘due diligence’ mean?

The insurance company expects claimants to move forward, at a reasonable speed, to return their business operation to normal.  The insurer provides time for the business to plan for reconstruction, obtain bids, and have the physical structures rebuilt.  The insurance company does not plan on paying for losses related to claimants dragging their feet while making these decisions.

If an insurance company does not believe that an insured acted in a timely manner (with due diligence and dispatch) they will limit the lost business income recovery to the value that they determine would be reasonable if the insured had acted in a timely manner.  This can result in days, weeks, or months of loss value being deducted from a lost business income claim.

To avoid this scenario, keep the adjuster up to date with your intentions to recover. Clearly document all of the business’ recovery activities on a regular basis.  These written records will memorialize the recovery efforts and will help support the claim that the business was making reasonable progress in these efforts.

Tagged as: business interruption, claims communication, claims process, documentation, due diligence, linkedin

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