Business Interruption Claims

Every day you get up and go to work at your office building or warehouse and assume it is going to be there. What would you do if one day you showed up and it was damaged to the point that you could not operate your business? More than likely you would make a business interruption claim on your property insurance. Most policies have a business interruption clause. In order to trigger coverage you would have to show:

  1. The damage was caused by a covered peril. Losses that stem from a storm would be covered. Losses that arise from a flood or earthquake probably would not be covered.
  2. The property damage must have occurred at the insured premises. In other words, damage to your neighbor’s property that restricts access to your property may not be covered.
  3. The damage must result in an actual stoppage of operations. To support your business interruption claim you will need to provide financial data to support your claim. This may include:
    • Historical profit/loss statements
    • Financial projections
    • Tax returns
    • Monthly sales and production reports
    • Inventory details.
    • Financial statements for three to five years prior

If these records were destroyed in the loss you will probably have to reconstruct what you can. Try to retrieve the data from offsite storage, the Cloud, a backup server, your bank, your vendors or your customers. Ask your insurance company for a detailed list of what they will require before you chase down every single document. It is also a good idea to keep track of everything you provide to the insurance company and make them acknowledge receipt. Keep a separate ledger for expenses directly related to the ongoing expenses associated with having to operate your business during this period. Contact Hoch Law Firm for help with business interruption claims.

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