Seventeen Easy Steps To Handle Commercial Lines Insurance Claims

Seventeen Easy Steps To Handle Commercial Lines Insurance Claims

What is Commercial Lines Insurance? 17 step guide on to How to Handle Commercial Lines Claims Documents Required to be submitted by the Insured

How do businesses protect themselves from the risk of financial loss or damage to property etc. or liability that may arise from an accident or non-professional acts of negligence?

The answer is simple. It is through property and casualty insurance. However, many times I have noticed that even though most of the businesses do take insurance coverage to protect themselves against such financial loss still, there are several questions that remain unanswered with regard to Commercial Lines Insurance.

In this blog, I have tried to address this issue by providing a 17 step guide on How to Handle Commercial Lines Claims.

I am sure after going through the blog you can easily say, “Yes, I Can Handle Commercial Line Claims”. Hope you will enjoy reading it.

Firstly, let’s discuss the topic of commercial lines insurance.

What is Commercial Lines Insurance?

Commercial Lines Insurance is a division of property and casualty insurance products designed for businesses by general insurance companies. The property and casualty insurance covers the risk of financial loss or damage to things or liability that may arise from an accident or non-professional acts of negligence caused by employees or a third party employed by business operators of such businesses.
Insurance contracts are based on the information provided in the proposal form by the insured at the time of taking an insurance policy. The correctness of the information furnished in the proposal form is verified by the Insurance company at the time of a claim when a physical inspection of the property is done. The date of loss, lost property, peril causing the loss, location of the loss and legal relationship of the Insured with the property/person or liability, should be the same as is declared for insurance and mentioned in the policy.

17 step guide on to How to Handle Commercial Lines Claims –

1. In case of any event giving rise to a claim, immediate verbal intimation to be given to the Insurer.

2. Take all possible steps to minimize the loss.

3. Followed by verbal intimation, a written Intimation containing:

(a) Policy no.,

(b) Date of loss,

(c) Brief description of loss,

(d) Estimate of loss,

(e) Address of loss,

(f) Contact person with his contact nos., mail ids be given to the Insurer.

4. The insurer will arrange for an inspection of the loss by deputing a specialist-licensed surveyor.

5. Extend full cooperation to the Surveyor in terms of showing claimed/damaged item, submission of the requisite information to substantiate cause, extent and tenability of the claim.

6. The insurer will send a claim form. Submit the completed claim form along with an estimate of the loss to the insurer. It is preferable to submit an itemized estimate with separate values.

7. Arrange and submit the documents requested by the surveyor in support of the claim.

8. For theft/burglary lodge FIR and provide a copy of the same to the Insurance Company. In case for some reason FIR is not available, an original acknowledge copy of loss intimation to the Police, be submitted.

9. Salvage Disposal—Detailed quotation/offer of salvage with specification and detailed bifurcation of material, its quantity & rates, which was prevailing as on date of loss or at present.

Salvage is that property:

(a) which escapes destruction or damage from the operation of an insured peril,

(b) the residual value of the property which is partially damaged and can be reconditioned or sold in order to determine the amount of loss.

(c) amount of money received from the sale of damaged property i.e. proceeds from the sale of salvage. Insured may decide to retain the salvage. when the amount is adjusted in the claim. Such settlement is said “net” of salvage.

In the below circumstances above approach cannot be adopted:-

(a) Insured may not offer fair value to salvage,

(b) In items like machinery or stock, the surveyor has reasons to believe that better realization possible if salvage is sold to a party other than insured.

10. Insured to furnish the total value of erection cost/investment made till date of loss at the said site with supporting authenticated certificate for verification of under insurance.

11. Give a reasonable and fair offer for salvage for retaining the damaged item.

12. Ask the surveyor to explain his claim assessment

13. If satisfied with the assessment give your concurrence to go ahead with the survey report.

14. If not satisfied give justification with preferable support of the third agency’s documentation.

15. In case the cause of loss is not established, it is for the Insured to prove that the loss or damage has occurred due to an insured peril.

16. For claims above Rs. 1 Lacs, submit KYC and AML documents.

17. ‘On Account Payment’ – This usually happens when the loss is large and completion of the final assessment may take quite some time. The Surveyor has to justify as well as recommend “on account” payment after confirming that the claim is admissible, there is no breach of warranty or other deficiencies in the claim and what would be the tentative loss amount.

(a) Normally, such payment is recommended by the surveyor when the insured has already spent money in replacing stocks, repairing or replacing machinery or is committed with suppliers, repairers, etc.

(b) Surveyor has to ensure that the recommended payment is well within the final amount of adjustment after application of average, salvage, excess, etc.

(c) The balance amount in the claim should be substantial and large enough to provide an incentive to the insured to supply all necessary details to facilitate the early completion of the final adjustment.

Documents Required to be submitted by the Insured:

We have mentioned a detailed list of required documents for each of the Commercial Lines claims which are indicative in nature and addition/deletion in the list will be done based on the need of the nature of loss or facts of the case. Also, clarification if any required the same shall be sought for as and when essential.


1. Firstly, the insured should take all possible steps to minimize the loss.

2. The fire brigade may be intimated immediately.

3. Lodge a police complaint in case of fire is major or loss is arising out of – rioting mob, striking workers, malicious damage by third parties or terrorist damage.

4. Obtain a meteorological report in case of loss due to cyclone, flood & inundation and if the loss is localized like in the case of flood & inundation from a local water source, an MRO report may be obtained.

5. If the policy is on a ‘Reinstatement basis’, the claim is settled only after completion of repairs/replacement of the damaged items and submission of bills for claim payment.


1. Claim Form

2. Details of loss with a break-up (Stock/building/Machinery)

3. Brief Note on the occurrence of the loss

4. Fire Brigade report

5. FIR and Panchnama

6. Quotations for repairs/replacement of the damaged property

7. Final bills along with payment receipts

8. Other documents may vary on case to case basis and shall be listed out in the surveyor’s letter of requirement on completion of the survey.


1. Immediately report to the police and obtain a non-traceable certificate that the items are not found.

2. The insurers will insist upon a letter of undertaking on a stamp paper of appropriate value, for refunding the claim amount when the stolen property is recovered.


1. Claim Form

2. Brief note of the occurrence

3. FIR and Panchnama

4. Detailed item wise monetary claim giving quantities and value undersign and seal.

5. Purchase Invoices for the stock stolen from the premises.

6. Plan layout of the premises marking the area from where the property is stolen and the point of entry made by the thief.

7. In case loss of stock is involved, Summary of stock stored at the location as on the date of loss.


Keep the damaged item separately and securely aside to avoid the subsequent aggravation of loss.


1. Immediate intimation along with contact details,

2. Note of occurrence,

3. Claim Form,

4. Letter of allotment to the user

5. Repair Estimate,

6. Replacement Quotation,

7. Original Repair Bill,

8. Original Payment Receipt,

9. Salvage Offer, or Destruction Certificate

10. De-activation/Re-activation Certificate in case of Mobile Handset

11. Police Intimation/FIR in case of theft,

12. Letter of Undertaking for Theft claims

Machinery Breakdown:

Keep the damaged item separately and securely aside to avoid the subsequent aggravation of loss.


1. Immediate intimation to the insurer along with contact details,

2. Claim Bill

3. Claim form duly filled signed and stamped.

4. A detailed note on the occurrence of loss with time factors in the proper sequence.

5. Cause of loss.

6. Purchase invoice of item damage in the captioned loss.

7. Service engineer’s report mentioning the probable cause of loss.

8. A detailed estimate of repairs of the affected item.

9. Repair invoice of the damaged item.

10. Proof of payment.

11. Logbook of said item /machinery.

12. Last repair record of the affected item.

13. Salvage Offer, or Destruction Certificate

a) As the Machine may have to be opened some of the consumable parts like oil, service kit, oil seal etc. also needs replacement on account of maintenance. Such parts are not in the scope of the policy and hence, not allowed.

b) Some damaged parts have a long life and some lesser life, hence average technical depreciation is to be applied.

Loss of Profits:


1. Company Profile.

General information-

a) Number of plants or locations

b) Plantwise Products for manufacturing company / Type of Service provided under the service industry

c) Installed capacities at each of the plants for each of the product / Capacity of accommodation, etc. in the service industry

d) The actual production of each of the product at each of the plant and

e) Product-wise Sales TO (quantity & value)- This is required as a monthly figure for the earlier financial year & subsequent months till the loss.

2. Affected Plant Profile –

a) About complex,

b) Plants

c) Products

d) Installed capacities, Production & TO- product-wise OR service wise.

3. Financial

a) Your claim for lost profit backed up by-

b) Earlier year’s Audited accounts for the company.

c) If several plants are involved then the individual plant wise audited results as adapted for the certification of the company results must be submitted.

d) GP working: NP + Specified Standing charges (or Turnover less variable charges) only for affected plant.

e) Reconciliation of GP (for the affected plant) with the sum of all product quantities (sold) and its contribution.

f) Product-wise/ plant wise output on daily basis for the last 3 months before the loss.

g) Same as above for months after the reconciliation.

4. Daily activity report on repairs /restart.

5. Saved standing charges if any to be identified.

6. Note on availability of RM and Market-related constraints, if any.

7. Note on Constrains on utilities if any prior to losing on a normal working.

8. Notes on de-bottlenecking/ expansion done if any during last year and dates of commissioning of such facilities.

9. Trends in selling prices and Raw Materials over 6 Months prior to the date of loss and after the loss.


1. The loss or damage should be reported to the insurer immediately with details such as:

(a) Policy No. on which the claim is preferred,

(b)Name and Cell No./Tell No. of the designated person to coordinate for the claim,

(c) Date of Loss,

(d) Short details of occurrence of loss and

(e) Estimate of loss.

2. The insured must receive/identify/note his/ her first notification of a claim or Potential claim situation during the policy period.

3. The claim or potential claim situation must be reported to the insurer during the Policy Period or as per provisions of the Policy.

4. Upon receipt of the intimation/notification, the Insurer may appoint Investigators/ Loss Adjusters/Loss Solicitors as per the requirement felt and the provisions of the policy.

5. In case of litigation, the insured shall place all the information/documents in the connection to Insurance Company.


Depending on individual circumstance, the following documents/ Information may be called/verified. The list given below is indicative in nature and any addition or deletion is likely on case to case basis:


1. Claim Form duly filled in and signed.

2. The detailed version about the incident / alleged misfeasance

3. Details of loss caused/injury/death/ including all available information on victims as well as the

4. Estimated quantum of liability.

5. FIR/Investigation report of Police

6. Survey/Investigation Report; Survey Report on the damaged property.

7. All notices/summons of the court

8. Post Mortem Report/Medical Certificate

9. Weather (Meteorological) Report

10. Pollution Control Board Report

11. Evidence of legal liability of the Insured


1. Steps taken by the Insured to mitigate the loss.

2. Statements from witnesses, photographs, visual records of evidence/circumstance, video, etc.

3. Any other evidence in support of the claim

4. Press reports

5. Details of other Insurance, if any.

6. Legal opinion/ Expert’s opinion on the admission of liability/appeal

7. Details of claims, if any, preferred by the affected party / insured for the same loss from any other source.

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