Business interruption (BI) insurance is a critical form of coverage to include in your commercial insurance policy line. When damages to property — or other key events outside the business’s control — lead to lost income, the business can be compensated through a business interruption claim.
Receiving the needed compensation for these claims can be extremely difficult. Not only are insurance carriers guaranteed to heavily scrutinize each and every aspect of the claim with teams of outside and internal experts, but many policyholders tend to undervalue their claims by failing to make the necessary projections. The total value of the lost income can be highly subjective, so businesses must be prepared to come up with an official number for their losses calculated using their own revenues and projections. On top of all this, they must document their own efforts to mitigate losses to the satisfaction of the insurer.
Public adjusters have spent years gaining the specific experience needed to adjust these complex business interruption insurance claims. They can be your own outside expert — someone who works for YOU to protect you from the goals and ambitions of the insurer.
Get your money’s worth out of your BI insurance policy by working with the Florida public adjuster team that’s trusted from the Keys to the tip of the panhandle. Pinnacle Claim Services works hard to help you recover, freeing up the resources you need to focus on getting your business back to full financial health.
Schedule a free consultation and case review today with an experienced business interruption insurance adjuster when you call 877-70-CLAIM or contact us online.
A business interruption (BI) policy is a form of insurance that compensates businesses for the income they lost as a result of being unable to conduct business — or when operating the business at reduced capacity — as a result of a covered event.
The most commonly covered events in business insurance include scenarios where there are damages to the business property, but a covered event can involve any of the following:
In addition, the Florida Department of Financial Services advises that businesses double-check their policy to ensure that items like the following are included as covered events:
Business property insurance policies only pay for losses related to the physical use of the building itself. Or, put another way, it only covers the physical structures and assets of the buildings where business takes place. A claim on this policy pays for repairs and other losses (such as the costs of relocating) directly related to damage inflicted by the event in question.
However, a commercial property insurance policy does not cover one key type of loss: the money lost while the business remains closed because of the damage inflicted. Every day a business remains closed, it loses out on money.
Many businesses operate on limited cash reserves, and their bills don’t stop just because a disaster has forced them to close their doors. Data from the Federal Reserve shows that default rates for business loans more than quadrupled in the early months of the COVID-19 pandemic, as mandatory closures and public hesitation caused revenues for many businesses to shrink to zero.
Business interruption insurance is a way to ensure that once the business location can resume operations, it has the money needed to open its doors. BI claims help dress the wound of a major event like a hurricane, stemming the hemorrhaging flow of cash so that the business is able to heal enough to start making money again.
In the event of a covered peril, a business interruption policy can kick in to compensate the business for the losses inflicted as a result of the disruption of business activities.
Every BI policy is different, but they generally provide coverage for things like:
BI policies can be highly customized to the point that they can kick in under specific circumstances that would normally be considered outside the scope of a normal policy.
Businesses should periodically review the coverage they have, especially in the wake of a natural disaster or other event that leads to business interruption. Keep an eye out for the following coverage types, and consider adding them if you feel that your business faces a high risk of losses within that specific coverage area in the event of a forced business disruption.
This type of policy covers property owners for lost revenues inflicted by an inability to use the facility as intended or to rent out the property to a tenant.
Most BI policies terminate benefits the very instant repairs are completed and/or access to the place of business is restored. Extended coverage acknowledges that, even once a business reopens, it will face a slow resumption to its pre-event earnings. An extended coverage add-on compensates the business for the continuing loss of revenues until it resumes its projected earnings, up to a period of one year or more.
Not all expenses are covered under a BI policy. In fact, most BI policies are not designed to compensate for specific expenses but rather to compensate for loss of revenues. With continuing expenses coverage, specific expenses may be covered until the business is capable of paying them on their own. Examples include the costs of payroll, mandatory payments made in connection with vendor or partner contracts, and interest on mortgages and other loans.
Extra expenses include the costs of relocating, temporary inventory storage, rehiring/training of staff required as a result of extended closure, and other specific expenses named in the policy.
A BI claim poses a particular challenge for both the claimant and the insurance carrier. There are stacks of documents and figures to consider, and lots of calculations to make to arrive at a final conclusion of the appropriate benefits given the policy.
The major difference between insurers and policyholders? Insurance companies are guaranteed to have lots and lots of help in their corner. Who do you have in yours?
Look to Pinnacle Claim Services to get the assistance you need in seeking all of the benefits you deserve under the language of your policy. Far too many claimants make the same extremely costly mistake: they rely upon the insurer to tell them their losses. Instead, these businesses should be furiously working to document their losses and present the math needed to back up their claim.
Pinnacle’s experienced commercial insurance public adjusters can help you put in all of the work necessary to dig deep into your books and find out exactly how much money you are losing compared to how much you would have earned.
When you hire a public adjuster from Pinnacle Claim Services, you can know with confidence that you have some serious help in your corner. While you and your advisors are the experts in your respective business areas, each one of you is only likely to have handled only a few major insurance claims in your lifetime — if any!
The process of preparing a claim is extremely intensive and time-consuming. Your own resources can be better spent focusing on what matters most: resuming your business.
If you are facing a denial of your business interruption insurance claim or are preparing to file one in the wake of a disaster, look for the help and expertise of our seasoned adjusters to get the guidance needed to maximize the value of your claim.
Here are some of the primary factors we consider when assisting small businesses and corporations with their business interruption claims.
Not every form of business disruption will be covered. In fact, insurers love to tell claimants that their particular event doesn’t fall under the categories of covered perils because of some reason or another.
In insurer’s defense, the language in BI insurance policies involves some pretty specific standards. If there are no direct damages inflicted, or if the business wasn’t technically inaccessible by the public for whatever reason, then the claim may be denied.
One primary example is the loss of business experienced by resorts and other hospitality operations along Florida’s panhandle following major hurricanes. Often times, a specific location isn’t actually damaged, and they were only made inaccessible for a brief period while roads were closed during the actual storm. While people may not want to come to a beach town that’s just gone through a hurricane, the claimant may not actual be experiencing a direct business interruption but rather the indirect consequences of a “bad market.”
On the other hand, insurance companies love to deny claims by alleging a lack of inaccessibility or by nitpicking whether or not damages were actually suffered from a named peril. A public adjuster will assist with reviewing the policy, documenting the sources of business loss, and establishing concretely whether the loss of revenues can be claimed as benefits.
While homes and commercial properties share common raw materials, every business is unique. That factor makes it much more difficult to put a final number on the losses inflicted by the business interruption.
Pinnacle’s public commercial insurance adjusters in Florida will help you compile revenues from the last few years to calculate an accurate number for typical earnings during the period in question. Even more importantly, we apply algorithmic models to your earnings to see if we can project a trend of increased revenues based on patterns in your last few earnings periods.
Oftentimes, businesses would earn more than ever if not for the disruptions they have suffered. Projecting future income enables the business to claim more for BI losses than they would have if they had merely taken an average number from the past few months of earnings.
Insurance companies understand the insurance business. They won’t make any great efforts to understand yours. As a consequence, they may not interpret factors like the loss of key customer demographics as having as large of an impact on your revenues as they actually did. A prime example is that an insurance carrier is not likely to project income growth during the period of business interruption covered by benefits.
It becomes the claimant’s responsibility to interpret these factors for their insurers and to present their own numbers for losses based on their uniquely deep understanding of their own business model.
As multiple experienced attorneys wrote in the National Law Review journal:
“Do not rely on the insurer to tell you what your losses are, as […]the insurer will not understand the business the way you do. Do not approach the damage claim by merely responding to the insurer’s questions and filling out the insurer’s forms. Instead, present your losses as you or your accountant understands them. Be prepared to fully document the losses, which may require a theoretical projection of the amount of business income lost. This will require a comparison with financial figures from prior years, growth estimates, pricing, and other trends.”
A BI policy commonly contains a “waiting period,” which refers to a delay in coverage for the first 48-72 hours of business interruption. This delay in benefits acts as a form of certainty, meaning that the business has suffered a loss not limited to just a few days of “bad luck.” Further, many policyholders will not be compensated for any losses experienced during this waiting period, making it act almost as a form of deductible.
Other policies kick in the moment a covered event leads to business losses. However, they will commonly only provide benefits during the “period of restoration.” Once access to the business is restored by, say, the re-opening of the road needed to reach the business, the coverage will end. Similarly, if the damage inflicted to the business preventing operations has been repaired, then coverage will end.
Insurance companies are notorious for interpreting the period of restoration to be as short as can be legally justified. To combat this tendency, the business must review their policy carefully and accurately document repair progress. Further, they may need to justify why they were unable to resume business to an acceptable capacity despite repairs being completed.
One thing an insurance company will be certain to demand for a BI claimant is proof that the business took every step possible to stem its losses. For example, a business that is unable to allow customers into its dining room may be asked if they would have been able to offer orders for pickup or delivery.
If an insurer finds that the policyholder has not made every reasonable effort to mitigate losses, they may reduce the benefits available — or even deny the claim outright.
A public adjuster augmenting your team can help you prepare for the due diligence needed while handling negotiations and communications with the insurance company, acting as a vital go-between in your fight to receive the benefits you need.
Major income losses inflicted during business interruption can be enough to cause any business to fold. Your hard work deserves the chance to re-open and begin earning big bucks once again.
Call Pinnacle Claim Services to receive the assistance and experience of one of our dedicated public adjusters in Florida. We come prepared to work hard and get you as much as possible out of the insurance policies you pay premiums for every month.
Reach out to us to schedule your damages inspection, policy review, and claims evaluation. Contact a live representative and schedule your case review now when you call 877-70-CLAIM or contact us online.
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When disaster strikes, it can be difficult knowing where to turn or who to ask for help. Pinnacle Claim Services’ professional team of Florida public insurance adjusters and support experts are here to assist you throughout every step of your damage claim from emergency services and mitigation through final settlement.
Some of the most common issues people experience with insurance companies after property damage has occurred and a claim has been initiated include: unreasonable delay on the part of the insurance company, inadequate training of the insurance company’s adjusters and adjusters that are “so busy” that your claim gets zero attention and does not progress towards resolution. Additionally, you may not have the appropriate policy with the right type of coverage or limits.
There is no set time period for settling a property damage claim with an insurance company and each claim is different. You could receive a check in a few days or it could be a few weeks. Also, it may take multiple rounds of negotiations and payments for you to be adequately and justly compensated for your claim.
Absolutely not. Some companies do possess better reputations than others and there are some who consistently delay the process unnecessarily. It’s important that you comply with your “duties after the loss” (duty to mitigate etc.) Call us, we can help!
Pinnacle Claim Services will request a copy of your policy, file the proper paperwork for you, put together a comprehensive estimate of damages and negotiate a fair settlement Do not become emotionally burdened. Do not be denied money for repairs you deserve. Rely on Pinnacle Claim Services to work on your behalf, keeping you informed throughout every step of the process to get every penny you deserve from the insurance companies.
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