Dealing with property damage at your salon can be extremely frustrating. But that frustration is multiplied when another party is responsible for the damage. We see many claims of this type at our office.
One of the more common occurrences – believe it or not – is a vehicle crashing through the front of a salon. Another common claim stems from a fire or water leakage in a neighboring business. Many salon owners believe that their insurance will not need to respond to these types of claims. They feel, and rightfully so, that the responsible party will take care of the damage. However, that is not always the case.
When you find yourself in this type of situation you should report the damage to your insurance agent right away. Even if you believe it will be taken care of by a third party, it is vital that your insurance company is aware of the situation. File a “notice only” claim to protect yourself in the event of a problem with the other party.
One course of action is to have your insurance company take care of the damage and loss of income, if any. This may be the quickest path. In this scenario, however, you will be responsible for any deductible. And you can’t assume that your company will be able to recover payment from the other party; subrogation is not always a given. The other party may not have adequate coverage or it may be determined that they were not liable, meaning their actions played no part in the cause of the damage. This is especially true in claims against landlords or neighbors. The insurance company also has the right to opt out of subrogation, depending on their evaluation of the cost and probable outcome. If subrogation isn’t an option or is unsuccessful, you will not be able to recover your deductible, and the claim will count against your policy.
If the responsible party’s insurance does cover the damage, it may not be at replacement cost. Most payments of this type will be at Actual Cash Value, meaning everything will be calculated at its current depreciated value. You may also not be able to recover your loss of income.
Neither of these options is perfect. As a business owner you must make decisions every day regarding the most cost-effective way to operate. This is one of those times. Weigh both options and determine the financial path that works best for you. Is the damage and loss of income substantial enough to justify going through your carrier, knowing that if your carrier is not be able to recover from the other party you will have a deductible and possible premium changes or condition changes when your policy is evaluated? Or do you choose to wait for the other party’s carrier to respond, knowing you probably won’t be reimbursed for the full value of your loss?
The one thing you should always do is keep your agent informed. Delayed reporting for any loss could impact your ability to recover. You always want to keep all avenues open.
Jenny is Vice President of Universal Insurance Programs, based in Phoenix, AZ. She works with new and existing salon owners to determine and provide insurance coverage for their unique business models. Contact Jenny with any questions regarding your insurance at 800.844.2101 x1480 or email firstname.lastname@example.org.
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