Tag: Business Interruption

Business Interruption Claims

Business Interruption Claims After Hurricane Maria

After any natural disaster, businesses don’t just face property damage; they also suffer economic damages from lost business. It can take a long time for businesses to resume operations after a natural disaster, and in the case of Hurricane Maria, many Puerto Rican businesses are still not operating. To help protect against these financial losses that come after natural disasters, many policyholders choose to purchase business interruption insurance.

What Is Business Interruption Insurance?

Business interruption insurance (also called business income insurance) is a type of insurance coverage that compensates the policyholder for the loss of income a business suffers after a disaster such as a fire, hailstorm, or hurricane. This coverage can cover income lost while the business was closed during a natural disaster and while the business is closed for rebuilding and repairing property damage from the disaster.

How Is Business Interruption Insurance Calculated?

When a policyholder files a business interruption claim, a thorough investigation should take place to properly calculate all of the losses endured by the business. The investigation will include an examination of financial statements such as a profit and loss report, along with the business’s history, and the number of employees, among other things. The insurance company will estimate the profits that would have been earned had the business been open based on the business’s history and other factors. The insurance company will then total and estimate the expenses a business regularly incurs, and the expenses the business incurs as a result of its closure such as moving to a temporary location. These totaled amounts should then be paid out to the policyholder to cover the entire financial loss due to the business’s closure.

Business Interruption Claims From Hurricane Maria Will Be Complex

Because Hurricane Maria destroyed the Puerto Rico’s electrical grid, downed most of the communication systems, and damaged many of the island’s highways, businesses were unable to rebuild and reopen for many months – some still remain inoperable. The losses from business interruption could be in the millions for insurance companies, and they will do everything in their power to limit claim payouts. Insurance companies often underestimate the cost of different expenses in order to help minimize claims.

Insurance companies have already faced extensive fines from the Commissioner of Insurance of Puerto Rico for unnecessarily delaying claims, but it is likely they will continue to drag their feet in paying out Hurricane Maria claims.

business interruption insurance

What Does Business Interruption Insurance Actually Cover?

You hope nothing will interrupt your flow of business, but in reality things like the hail, fires, or other types of disasters could bring your business to a screeching halt. For this reason, some business owners invest in business interruption insurance to help protect them from economic losses.

What Is Business Interruption Insurance?

While most business owners have commercial property insurance, many policies only reimburse owners for property damage. Business interruption insurance will reimburse you for lost income as a result of a disaster. But before your insurance company cuts you a check, there are a couple of requirements that have to be met.

Business interruption insurance works hand-in-hand with commercial property insurance, and for this reason, there usually needs to be physical property damage to the business in order to submit a business interruption claim. Additionally, in order to file a business interruption claim, the damage that has caused the interruption must be covered under the property insurance policy. For example, if a business owner is not covered for damages caused by a flood, they will not have business interruption coverage either.

Determining Reimbursement

After submitting a business interruption claim, your insurance company will need to determine the amount of lost income. They typically do this by looking at the company’s sales and net profits over a period time. The business owner will be expected to provide any and all documentation relating to the income and expenses of the business. There are a variety of ways insurers can calculate lost income, but your insurance policy will specify exactly which formula will be used.

Business interruption insurance can cover a variety of expenses for businesses. For example, if the business needs to relocate in order to continue to operate, a business interruption policy will generally cover this expense. The policy should also cover ongoing expenses like utilities that the business will continue to incur before it is operational again.

Business Interruption Claims Attorneys

If your insurance carrier denies your business interruption claim, the experienced attorneys at Raizner Slania can help. We have extensive experience dealing with all types of insurance claims, negotiating with all major insurance companies, and taking the carriers to court when necessary. We can help you obtain fair value for your business interruption claim and get your business up and running again. Call us today for a free consultation.