Loss of Business Interruption Insurance Claim Disputes

Business Income Loss Insurance Claim Disputes

Understanding Business Interruption Claim Disputes

Business Interruption insurance coverage can be extremely difficult coverage to handle in appraisal. It is for the most part tied to a loss at a physical insured location (a building or buildings) and involves determining a dollar amount of earnings for a business including continuing expenses that did not occur as a result of the loss. In order to determine what the business would have earned had the loss not happened, it is necessary to consider historical data as well as consider how future plans and trends would have affected the business operations. Business interruption coverage comes in many forms and should be structured by the agent/broker for the particular client’s operations and needs.

One of the common misconceptions about business interruption coverage is that the coverage will pay for the full loss the insured sustained following a covered loss. Most basic forms for B.I. coverage will only pay for the loss the insured incurred during the period of time it takes to repair or replace the physical damage at the insured location. For example: a restaurant sustains a fire loss. Using due diligence and dispatch as well as the market conditions for labor and material it is estimated it will take six months to make repairs. The insured if covered for B.I. may be offered an amount for this six months. Unfortunately, businesses like this will often lose customers who may never come back or, if they do, it will take more than the required time to physically rebuild the business to restore sales to their previous levels. This loss of market is not going to be covered unless the insured buys extra coverage.

In addition to the difficulty of agreeing on the loss under first party Business Interruption, there is the issue of agreeing on how the loss will be calculated. Historical data such as tax returns and profit/loss statements should be used to determine revenue as well as expense components. Most business interruption calculations require that expected sales need to be determined and then variable expenses subtracted to determine the actual loss incurred by the policyholder. It should be noted that there are many types of coverage forms, so one should take great care to understand their endorsement, as this process will be outlined therein.

While past sales are known, future sales are always a point for negotiation. Sales trends need to be determined and reflected in future sales at an accurate increase in percentage going forward. An interesting issue has often come up regarding how many years to look back in order to determine a trend line to apply to the last known sales before the loss. A positive sales trend line can have a big impact on a B.I. claim. This is often overlooked by the lay person trying to calculate their own claim. We know of no hard fast rule on this matter and have used adequate windows of time as far back as 5 years to see if a positive trend can be established for our clients.

Loss of business income is considered a defined period of time when the normal flow of income is interrupted for any reason. Loss of business income can be detrimental to the business because during this time period, in a business does not have reserve funds, employees cannot get paid, bills will be neglected and the business can fall apart. In order to ensure that a business is covered in the case of such an emergency, it is important for business owners to seek out loss of business income insurance.

Business Income / Interruption Insurance Claims

Reasons To Hire a insurance appraiser To Help Handle Your Business Loss of Income Insurance Claim

National Adjusters are truly the premier Insurance Appraisers when it comes to providing unparalleled knowledge, experience and professionalism. The services we provide as a insurance appraiser is so important to the public when residents and business owners are faced with damage. Remember the insurance companies have an insurance adjuster on their side and you should have one on your side. The time for contacting an adjuster is now, you don’t want to wait until the damage occurs because you’ll be scrambling for help and that’s when mistakes happen. We are a professional firm looking to connect with you and give the help you need to fully recover from your damage. Here’s why he is simply the best choice to hiring a insurance appraiser in Florida:

National Adjusters are Insurance Appraisal Experts
We are aproven leader in the adjusting world
Google Plus 5 Star Rated
Our staff is very easy to work with and is knowlegable