A Claimant’s Guide to Business Interruption Insurance Claim Calculation

Posted on March 1, 2022


Long Nguyen | author

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ICHQ | Site Author

When a natural disaster forces you to shut down your business, even for a short period of time, the consequences for you and your loved ones can be significant.

Once you’re safe, the next step is filing a business interruption insurance claim. Unfortunately, this process can be complicated and frustrating, particularly for those without experience. Trying to go it alone can lead to costly mistakes, which makes hiring an experienced business interruption insurance attorney all the more valuable.

At Insurance Claim HQ, our team of business interruption lawyers have experience calculating lost income, filing claims, and fighting back against insurance companies who unfairly deny legitimate claims. We know the value of your claim and are ready to help you build your case.

In this article, we will cover the value of interruption insurance, how to calculate your claim, and what your insurance company expects of you during this process.

The Value of Business Interruption Insurance

After storms, many businesses must consider the economic impact of having to close. The effect of natural disasters can last days, weeks, or longer, and may even cause permanent physical and financial damage to an uninsured business.

A business interruption insurance policy can provide much-needed protection, but it also comes with the burden of having to properly calculate the value of your claim. Although this process can be complicated, doing it correctly (and getting your claim approved) can end up being the difference between re-opening on firm financial footing or closing for good.

Business interruption insurance covers the financial side of your business. It helps to protect you during covered events from economic losses such as lost profits, maintenance costs, utility bills, wage costs, and continuing expenses like loan payments. Since your business income insurance covers a wide range of costs, it is vitally important that you are as accurate as possible while calculating your business interruption loss.

Business Interruption Coverage vs Property Insurance

Many people are unaware that business income coverage is not the same as property insurance and will add an extra expense to your business insurance policy. Property insurance covers only the physical damage that a covered event causes to your business property. It does not, however, cover any of the additional financial consequences that are also a direct result of the covered event. That is what the business interruption policy is for.

If you or your loved one own a business—particularly in an area like Louisiana, which is prone to natural disasters or other covered events that can significantly impact any business—it is important that you have the proper insurance coverage.

Although filing claims may be complex, the protection that comes with business interruption policies can make all the difference. An experienced insurance claim attorney can also help ease the process and calculate business income, so you can focus on rebuilding your business.

How to Calculate Your Claim

When it comes time to calculate your claim’s worth, there are several things you need to consider. It is important to be as careful and thorough as possible during this stage, as it will determine the potential success of your claim.

Before you calculate your claim, you need to consider factors and how they affected your business during the time of the covered event:

  • How long was business disrupted? When calculating the economic impact of the covered event, it is important to be as accurate as possible while estimating your indemnity period, or the time until you can return to normal business. This should include all potential government roadblocks, repair times, and any other time required to get back to normal operation. This is the most commonly disputed aspect of a business interruption claim, so clarity is key.
  • Lost revenue: Calculate and estimate the potential gross profit you would have gained if not for your covered event. Be sure to calculate for any potential growth or decline, as well as potential inflation. It is important to gather evidence of all financial losses during the loss period, as any missed expenses will not be covered
  • Calculate saved expenses and subtract from lost revenue: The one factor many claimants don’t consider when filing a claim is the potential revenue they saved during the time of the covered event. This includes lower utility costs, saved labor costs, and any other potential savings. Be sure to subtract this from your lost gross profit to get your overall net income loss for your claim’s final value.

What Your Insurance Company Expects From You

When you file a business interruption claim, your insurance company is not on your side. They will not assist you in ensuring your claim is correct and will likely try to deny you if there are any mistakes.

When it comes to business interruption claims, the burden of proof is on the policyholder, meaning you will have to prove your claim’s worth as the business owner. This will involve collecting evidence like tax returns, income statements, sales records, budgets, projections, and more to support your claim’s calculated covered loss.

By hiring an experienced business interruption attorney, you have access to someone who knows exactly what documents can help your claim. Your attorney can compile and analyze evidence, work with you to double-check the value of your claim, and even communicate with the insurance adjuster on your behalf.

Insurance Claim HQ: Fighting Against the Insurance Company to Protect Business’ Rights

We have seen the impact natural disasters can have on businesses. That’s why our team of experienced business interruption insurance lawyers fight against unfair claim denials.

At Insurance Claim HQ, we are ready and available to walk you through the claim process and hold your insurance company accountable for getting you the compensation you deserve. If you or a loved one has suffered a loss of business from a natural disaster, contact our team or call us directly at 844-587-8395 for a free consultation.

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.