BUSINESS INTERRUPTION INSURANCE IS THE MOST MISUNDERSTOOD AND COMPLICATED FORM OF PROPERTY AND CASUALTY INSURANCE

Business owners may suffer economic damages in addition to a loss of tangible business property. This damage is in the form of lost income from the temporary closing of the business operations or extra expenses incurred as the result of a loss. Some or all of these losses may be covered by commercial property insurance.

Standard scopes of coverage:

Business interruption insurance is designed to protect the earnings of the insured business in the event of a loss or where the operations must be interrupted for a period of time. This coverage comes into play when the business must suspend operations due to a loss or a loss of use or damage to any of its machinery, equipment or buildings.This business interruption coverage is generally provided by an endorsement or rider to a commercial property insurance policy.

Duties in the Event of Loss:

Our insurance company clients want their insured to put their claims together in compliance with the terms and conditions of their policies.The specific duties are outlined in a particular policy, however, in general they would include.

1. Giving the insurance carrier prompt notice of the loss including a description of the property involved.

2. Take reasonable steps to protect the property from further damage and if possible set aside the damaged property for examination by the insurance carrier.

3. Maintain a record of the expenses and temporary repairs incurred in limiting this damage.

4. Prepare and sign a sworn proof of loss which contains information requested to enable the carrier to investigate the claim. There is usually a very short time period for this request and if the business does not file within that time frame, their chance of recovery is lost.

5. Cooperate with any investigation made of the claim.

6. Resume all or part of operations as quickly as possible if the intent is to continue in business.

Proof of Loss Form:

Many current policies require the insured to submit a signed proof of loss form within a specified time frame in order to protect their right of claim under the policy. The time period in which the insured must file a proof a claim can be waived or extended by the insurer.This proof of loss outlines how the loss occurred and the amount of loss for which the insured is making claim. This forms the basis of the claim and gives the insurance carrier the documents necessary to review the claim.

Important Considerations:

Important considerations include, but are not limited to:

1. It is important that you notify your insurance broker or agent.

2. Modify accounting system to accumulate the cost associated with any repairs or extra expenses resulting from the loss.

3. Do not make assumptions about insurance coverage. There are all types of policies and each policy needs to be reviewed. Make all decisions based on the company's best interest.

4. Gather all documents to support the business interruption claim.

5. Continue to provide any additional documentation and information requested by the insurer.

 

Forcon Services:

Forcon International Corp.'s team of accountants has the expertise in claim preparation/review to assist the affected parties in achieving a timely resolution to these issues.

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