When a hurricane, fire or other disaster damages your business, filing a business interruption insurance claim may be your only option to cover your company’s expenses during the repairs. If you cannot sell because your systems are down or your facilities are inaccessible, business interruption insurance can provide the income replacement you need to stay afloat you go through the rebuilding process. If you purchased “extended” coverage, your policy will cover your business losses for a period after you reopen as well.
So, you purchased business interruption insurance, and now you need to use it. What do you do?
1. Contact Your Insurance Company.
First, you should file a claim with your business interruption insurer right away. Generally speaking, you want to get your claim on file as soon as possible after the interruption occurs – so it is clear that all ensuing losses relate to the interruption and not another, non-insured issue.
2. Make Sure You Know What is Covered.
At this point, you need to sit down with your business interruption insurance policy and make sure you know what is covered. Read through your policy carefully, and seek legal advice where you have questions. Insureds often run into issues with their insurers denying valid claims or misrepresenting the terms of their policies, and you do not want to let bad-faith insurance practices get in the way of your business’s recovery.
3. Take Appropriate Steps to Mitigate the Damage.
This can get tricky with business interruption insurance; but, after a disaster, it is important that you take appropriate steps to mitigate the damage. You certainly should not put yourself or your employees at risk for physical harm, but there may be steps you can take (such as salvaging a computer server) to avoid unnecessary losses.
4. Collect Your Financial Records.
In order to receive payment under your business interruption policy, you will need to be able to provide documentation of your company’s pre-interruption revenue and expenses. So, now is the time to begin assembling your recent financials to give to your insurance company.
5. Document Your Expenses and Lost Income.
Since your coverage will be based upon your company’s losses stemming from the interruption, you need to continue to document your income (if any) and expenses during the interruption period as well.
6. Seek Multiple Bids.
You should have the right to choose your own contractor; and, when it comes to trusting someone to get your business back up and running, it can be a good idea to solicit multiple bids. Experience, time, cost and availability should all factor into your contractor selection.
7. Seek Help When You Hit Insurance Roadblocks.
Finally, when you run into issues with your insurance company, seek help promptly. Bad-faith insurance practices are common; and, in general, securing adequate payment under a business interruption insurance policy can be a challenge. By taking action at the first sign of a potential issue, you can make sure your rights are secure while helping to restore your business as soon as possible.Share