Dealing with property damage at your salon can be extremely frustrating, and that frustration is multiplied when another party is responsible. Unfortunately, our office sees many claims of this type all too often.[gap height=”15″]
One of the more common occurrences at salons, believe it or not, is a vehicle crashing through the storefront windows. Other common claims stem from a fire or from 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, and should, take care of the damage. However, that is not always the case.[gap height=”15″]
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 provider is aware of the situation from the beginning. File a “notice only” claim to protect yourself in the event a problem with the other party arises.[gap height=”15″]
One course of action is to have your insurance company take care of any damage and loss of income right away. This may be the quickest path to getting your salon back up and running. In this scenario, however, you will be responsible for the deductible and you cannot assume that your company will be able to recover payment from the other party. Subrogation (the right for an insurer to legally pursue a third party that caused an insurance loss to the insured) is not always a given, and oftentimes, not an option. The other party may not have adequate coverage or it may be determined that they were not liable, meaning that their actions played no part in causing the damage, even if it occurred inside their (neighboring) business. This can be especially true in claims against landlords or fellow tenants. The insurance company also has the right to opt out of subrogation, depending on their evaluation of the cost and the probable outcome. If subrogation is not an option or is unsuccessful, you will not be able to recover your deductible, and the claim will count against your policy.[gap height=”15″]
If the responsible party’s insurance covers the damage, it may not be at replacement cost. Most payments of this type will be at Actual Cash Value (ACV), meaning everything will be calculated at its current depreciated value. You may also not be able to recover your loss of income.[gap height=”15″]
Neither of these options is perfect. As a business owner, you must make daily decisions regarding the most cost-effective way to operate and protect your business moving forward. This is one of those times. It’s important to weigh both options and determine the financial path that works best for you and your business. Is the damage and loss of income substantial enough to justify going through your carrier, knowing that if your carrier cannot recover from the other party, you will have a deductible and possible premium changes or condition changes when your policy is reevaluated? Or, do you choose to wait for the other party’s carrier to respond, hoping it is quickly, and knowing you probably won’t be reimbursed for the full value of your loss?[gap height=”15″]
In either situation, the one thing you should always do is keep your agent informed. Delayed reporting for any type of loss could impact your ability to recover, and you always want to keep all avenues open. Always discuss with your specialized agent any policy provisions you’re uncomfortable with or don’t understand. An informed businessperson is in the best position to make smart decisions.[gap height=”15″]
Even if you believe damage will be taken care of by a third party, it’s vital to inform your provider of the situation from the beginning.
