If your insured/organization has been affected, A&C can help manage business interruption.
Business Interruption
Business interruption insurance is designed to do for the insured what the business itself would have done had no interruption occurred. This type of coverage usually comes into play to reimburse an insured for losses sustained due to the total or partial suspension of the policyholder’s operations during a period of interruption. For instance, a retail or manufacturing operation that suffers storm or flood damage to its property could pursue, under its business interruption coverage, the profit it lost while repairing the damaged property.
While policy wordings and case law interpreting these provisions varies, business interruption provisions generally require:
- loss or damage to insured property;
- interruption of the business due to a covered loss;
- loss of income or profits; and
- that the losses occur within a “period of restoration” which may be subject to a waiting period.
Business interruption losses often present tricky valuation and calculation issues that are best analyzed soon after the loss or even as the loss progresses, rather than long after-the-fact when it may be difficult to obtain important supporting data. Your business interruption coverage may require you to expedite repairs, mitigate losses and/or track expenses in a way that is not consistent with your normal business practice. Many policies also provide coverage for “extra expense” associated with maintaining production while property is being repaired or for certain expenses incurred before physical damage to property. Covered extra expenses generally include such costs as rent, moving and hauling expenses, overtime, temporary labor, and even advertising. An early evaluation of your coverage can help smooth the path to making sure covered expenses are properly captured and presented to insurers. Fortunately, many policies include coverage for outside professional fees incurred in quantifying the loss.
Contingent Business Interruption/Dependent Business Premises
If your suppliers or your customers suffer loss or damage as a result of the disaster, you may have a claim for contingent business interruption due to your inability to acquire or deliver materials or services. These provisions generally extend the business interruption coverage to include loss of gross earnings at the insured’s premises as a result of a supplier’s or customer’s inability to deliver or receive goods or supplies due to damage to its property. For instance, a manufacturer that cannot acquire raw materials because of damage to suppliers in Texas may be able to pursue contingent business interruption coverage for its resulting lost profits. Determining whether your policy has been triggered, the requirement to purchase replacement supplies (“cover”), the appropriate period of restoration and the anticipated revenue or income had the damage not occurred can all be complicated issues necessitating the help of experienced coverage counsel and accounting professionals.
A&C is a multidisciplinary firm with accounting, advisory, audit, and tax professionals that are ready and able to assist nationwide with claims arising from Hurricanes Harvey & Irma or any other covered event.
For more information please reach out to us or call toll free #: (866) 385-8455
