Arizona’s Guide to Commercial Property Damage Claims: What Every Business Needs to Know

While Arizona ranks second in the U.S. for commercial real estate development contributions, like any other state, damage comes with the territory. Dust storms that coat equipment in debris, monsoons that batter rooftops, and wildfires that engulf properties can lead to unexpected repair costs, operational downtime, and financial losses. Knowing more about the types of commercial property damage, as well as understanding how insurance applies to different types of damage claims, can help Arizona business owners protect their investments and recover losses without unnecessary delays or disputes.

Common Types of Commercial Property Damage Claims in Arizona

Commercial property owners are vulnerable to a wide range of risks that require quick and informed action. Below are the state’s most common types of commercial property damage claims.

1. Fire Damage

According to Arizona’s Department of Forestry and Fire Management, humans were responsible for over 80% of the state’s fires in 2020. Altogether, 2,520 wildfires burned 980,000 acres (42.7 billion square feet) of state, federal, and tribal lands in nearly all corners of Arizona. Accidental or unexpected fires, whether due to electrical malfunctions or disasters, are also common.

Business owners must consider the possibility of a fire breaking at any time. Their policies must cover both immediate and secondary damage (e.g., firefighting efforts) to avoid heavy financial blows.

2. Water Damage

Flooding? In Arizona’s desert climate? Yes, it happens! 

The state’s monsoon season spans June through September. Water damage from heavy rains and flash floods compromises structures, destroys inventory, and induces mold growth.

Standard insurance policies typically exclude flooding without additional coverage. Properties in flood-prone areas like Phoenix must secure specialized insurance policies to cover the risk. With flood damage causing $8 billion in annual losses in the United States, proactive preparation and maintenance are a must.

3. Wind and Storm Damage

Aside from flood damage, strong winds and dust storms are common during the monsoon season. Roofs lose shingles, windows shatter, and debris impacts exterior and interior structures.

Storm-related damages are a costly issue in the Grand Canyon state. On average, extreme storms cost Pima County and Tucson over $9 million annually in property damages. Extreme storms also cause at least one death and 3.3 injuries each year.

4. Vandalism and Theft

Urban areas in Arizona, such as Phoenix and Tucson, are prone to vandalism and theft. In fact, South Tucson has the highest property crime rate in the state.

Commercial properties are susceptible to graffiti, broken windows, or burglary. These incidents disrupt daily operations and increase repair costs. Comprehensive insurance policies that cover vandalism and theft mitigate the financial burden, although it’s also important to have robust security measures (e.g., 24/7 proper surveillance and security guards) to cut down on risks.

5. Mold Damage

While Arizona’s arid desert climate minimizes mold risks, it can still happen after monsoons or unresolved water damage. Mold rots wood, weakens drywall, ruins insulation, and causes other damages that compromise a property’s structure. Spores also degrade indoor air quality, which can trigger hay fever-type symptoms for employees and customers. Addressing water-related property issues, such as leaks or flooding, as soon as possible prevents these risks.

Standard insurance policies may not cover mold remediation unless the policyholder (insuree) makes specific endorsements. Business owners must review their policies to confirm whether they account for mold-related losses.

State Laws and Insurance Policies Specific to Arizona

Commercial property owners must note the following:

1. Statute of Limitations for Property Damage Claims

Arizona law imposes a two-year statute of limitations “clock” for filing property damage claims. In simpler terms, business owners must act within two years of discovering the damage to seek compensation. Failure to meet this deadline may result in a denial of claims. Learn more about this law at Arizona Revised Statutes section 12-542.

2. Unique Provisions in Arizona Insurance Policies

Arizona insurance policies may exclude certain types of damage unless businesses purchase additional coverage. For example, standard policies leave out flood damage from monsoons and require a separate flood insurance policy. Similarly, policies often rule out mold remediation unless business owners add endorsements specific to this risk.

On the other hand, standard property insurance often includes theft, vandalism, and fire, but may limit coverage for wildfire-related damages based on proximity to fire-prone areas.

3. Bad Faith Claims Against Insurers

The state of Arizona protects policyholders with laws against bad faith practices by insurance companies. Insurers must act fairly, process claims promptly, and provide clear reasons for denials. If an insurer unreasonably denies or delays a claim, the policyholder has the right to file a bad faith lawsuit. Courts in Arizona have historically sided with policyholders in cases where insurers failed to act in good faith.

4. Requirements for Business Interruption Coverage

Arizona businesses must review the fine print in their policies regarding business interruption insurance. Coverage depends on physical property damage that directly leads to lost revenue or additional expenses. Insurers require documented proof of losses, including but not limited to financial records and repair estimates. Without evidence, insurers may dispute or deny claims.

How to File a Commercial Property Damage Claim in Arizona

Despite the two-year statute of limitations, business owners must act fast when filing a property damage claim.

First, document the damage with HD photos, videos, and detailed notes. Include timestamps to provide a timeline of the incident. Notify the insurance provider immediately to start the claims process. Delays, as mentioned, can be grounds for disputes or outright denials.

Next, mitigate further damage. For instance, cover broken windows or repair leaks temporarily. Failing to act may violate policy terms and give insurers a reason to deny a claim. Don’t forget to review the insurance policy to identify coverage, exclusions, and any specific filing requirements.

What to Do if an Insurer Denies a Property Damage Claim

If an insurance firm denies a claim unreasonably, disputes it, or offers an unfair settlement, gather supporting evidence, such as repair cost estimates, receipts, and business interruption records, to strengthen the case. Insurers in Arizona must comply with laws against bad faith, but enforcing a policyholder’s rights often requires experienced legal help.

FR Law Group has decades of experience representing local businesses in commercial property damage disputes. We understand the financial stakes and fight tooth and nail to hold insurers accountable for denying valid claims, delaying payments, or undervaluing losses. Contact us to protect your assets and secure the compensation you’re entitled to under the law.