Services | Business Interruption Claim Preparation and Negotiation

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Business Interruption Claim Preparation & Negotiation

In the aftermath of Hurricanes Katrina and Rita, many homeowners, business owners and institutions sustained significant physical damage losses. Because the purchase of flood insurance is not universal, many sadly are not going to recover enough to compensate them for their actual loss. For those business owners who prudently purchased business interruption and extra expense insurance, many will be disappointed in how much the insurance company offers them for their economic losses. Of course, those who had no business interruption insurance are going to be out of luck.

While the rescue and welfare of people is the highest priority in a disaster, we know from experience that later on many policyholders are going to need help with their insurance claims. Disappointment often leads to disputes and even litigation.

Whether a hurricane, a fire or other covered peril, we think insurance consumers should seek the advice of an expert to help them with their business interruption claim. The insurance companies are going to be represented by a public adjuster and possibly a forensic insurance accountant. Why shouldn't the policyholder have an expert on their side?

Key Benefits

  • Larger settlements than the insurance company initially offers
  • Lower fee based on estimated time and expenses versus contingent percentage of the claim.
  • Recommended improvements to the insurance coverage and loss control techniques to avoid and reduce business interruption losses in the future

Business Interruption Work Plan

Here are the steps in a typical work plan:

  1. Discuss with you what happened -- and how the fire, windstorm, earthquake or other property peril affected your business.
  2. Analyze your property, boiler & machinery and other related insurance policies in force at the time of the loss.
  3. Give you a preliminary opinion as to what insurance will be available and what the claim presentation and settlement process will be.
  4. Help you prepare a request for an advance payment on your claim
  5. Visit the site of the loss to learn about the manufacturing process or the services provided there -- and to confer with your accounting department concerning the available financial reporting, cost, budget and managerial accounting information.
  6. Compile selected financial information to be used in projecting what the business income would have been had the loss not occurred.
  7. Prepare a preliminary estimate of the loss of earnings and continuing expenses by comparing the projected earnings had the loss not occurred to the actual earnings (loss)
  8. Discuss your accounting policies and procedures and help you formulate a claim presentation strategy.
  9. Assist you in filling out the sworn proof of loss and in submitting your business interruption claim.
  10. Participate in meetings with the insurance company claim representative and their forensic accounting firm.
  11. Advise you in negotiating a final claim settlement.

Analysis, Strategy and Advice = Solution

Problem » A Caribbean hotel and casino resort sustained a major interruption of its business as a result of a hurricane just before the start of the winter vacation season.

Solution » We used statistical techniques to de-seasonalize the data and quantify the loss of earnings in the various hospitality and gaming departments. We also uncovered an omission in their business interruption insurance policy. This left them uninsured for the loss of earnings at a casino that they managed for another owner. We helped them negotiate a significantly higher claim recovery. We also recommended the purchase of contingent loss of earnings insurance at the location they managed.

Problem » A Midwest tornado tore the roof off a nursing home. The operator was compelled to empty the facility during the period of restoration. Further, local ordinances required that the facility be upgraded to code before it could re-open.

Solution » We used statistical techniques to quantify the loss of earnings and provided the customer support for invoking the ordinance of law provisions of its business interruption policy to extend the period of indemnity. We helped them negotiate a significantly higher claim recovery.