Business Interruption 101
Business Interruption claims and their formulation are one of the most subjective elements that a business owner will have to deal with following a loss.
It is reassuring when you have Business Interruption Insurance, but you may have unanswered questions if a disaster were to occur:
- What are the steps I need to follow to file a claim?
- Will the claim be approved?
- How soon will I get the money?
Here are a few tips to help you successfully file a Business Interruption claim that gets approved quickly and will hopefully get the highest settlement possible.
Ensure Everything is Documented
Take photos and videos before you begin any clean-up operation or repairs. This is proof of the original full extent of the damage and can be used to demonstrate and represent the truest and fullest extent of the damage
Make Initial Repairs
You will probably need to make some initial repairs. These could be to protect your property from further damage and for health and safety reasons. It is essential that you save any of the damaged parts as they may need to be examined later. Keep all receipts in relation to any repairs as these can be reimbursed and form part of the final settlement figure.
Understanding your Insurance Policy
This is critical. You should be fully aware of what your policy covers e.g. specific endorsements, warranties or exclusions. Being clear on this before you contact your Insurance Company or Loss Adjustor will save a lot of time and ensure there is a flow of consistent information which may affect any future decisions.
Be aware that most Business Interruption covers have a “material damage proviso”. In other words, there must be a material damage loss and policy liability under the “property damage” section before the “business interruption” section can come into operation.
Compile a Preliminary Claim
Assessing the impact of a Business Interruption is challenging and complex for a number of reasons:
- how long will repairs take ?
- how the loss will be quantified ?
- how successful the loss mitigation will be?
So, it may be useful to prepare a preliminary of loss. This should be carried out in the first 30 days and clearly marked as “preliminary” to avoid any confusion. It should be updated as and when further information becomes available.
Present a Solid Case
Be proactive from the start. It is not enough to just fill out forms and answer questions. It is YOUR business, and no one knows it better than you. Make sure assumptions are not being made as it could diminish your settlement figure.
- Ensure all losses are documented, at the very least:
- your business income before and after the loss;
- expenses relating to the temporary operation of your business during the interruption;
- regular expenses that are not negotiable e.g. mortgage, suppliers, tax, insurance, etc;
- inventory of damaged or destroyed items;
- receipts relating to temporary repairs.
It goes without saying that the more detailed your claim is, the quicker the process, and the more accurate your settlement will be.
Maintain Contact with the Insurance Company
It is important to build a positive, efficient and transparent relationship with your insurance company. Ensure they are aware of all matters relating to the interruption including any concerns you have.
Track all communication – keep copies of letters and emails and request documents in writing to avoid misunderstandings.
Stand your Ground
Due to the complexity of Business Interruption claims, ambiguities may arise. Be prepared to take an assertive stance if you do not agree with the interpretation of the claim, and do not sign any settlement without fully understanding the details of what it is offering. It is important that you don’t feel pressured at any point into settling quicker or for less money than you feel you deserve.
Business Interruption claims are rarely straightforward, and you may wish to pass the management of your claim to a professional loss assessor who can take care of all of the above ensuring that your claim is comprehensive and that you receive your full entitlement. At Insurance Claim Solutions we are experts in managing your claim from start to finish so you can focus on getting your business back on its feet.