The aftermath of a catastrophic hurricane can overwhelm those impacted by the storm, especially in South Florida, which is prone to the effects of a hurricane. For businesses that sustain significant damage, the physical loss to the property is often overshadowed by the loss of income that can result from the closure of the business.
Imagine returning to your business after a hurricane to find significant damages to the property. In the following days, you realize that you will have to suspend your business operations while you make repairs. You also may have to replace equipment necessary to keep your business running. All of this is going to result in a substantial loss of profits and cause you to incur significant expenses to keep your business operating.
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While this would be overwhelming, you may feel confident that your insurance company will come to your aid and support your efforts. In an ideal world, you would be right. However, the moment you report a claim for business income or extra expenses, the insurance company employs a team of adjusters, attorneys and accountants to scrutinize your financial stability and find ways to minimize your recovery. Unfortunately, this is compounded by South Florida’s reputation as a hot bed for insurance fraud.
The insurance company’s scrutiny of a business’ financial stability can be intense. The insurance company will require documents that may include tax returns, profit and loss statements, monthly bank statements, canceled checks, ledgers or stubs used for recording checks, payroll registers, utility bills, wire transfers, documentation of monthly income, inventories, etc. The failure to produce the records could result in a delay of payment or even denial of coverage for the loss.
There are steps South Floridians can take now to prepare themselves for the insurance company’s extensive requests and expedite the claim process.
It is crucial that you become familiar with the finances of your business. Waiting until after a loss to keep accurate records or create a financial history of the business is less than ideal. Speak with your accountant or bookkeeper to gain an understanding of how the records are kept so that they may be easily identified.
Waiting until after a loss to keep accurate records or create a financial history of the business is less than ideal.
You should also know your projection of sales and expense costs and be able provide an analysis and supporting documents. It is up to you to substantiate your damages, and the failure to maintain these records can result in a significant financial loss.
It is also prudent that all electronic records are backed up or stored on a protected server. The wind, rain and storm surge that accompanies a hurricane can destroy these documents if not property protected. Discuss your document management system with your IT department to ensure you have adequate protection.
By expecting the best and preparing for the worst you will be ready for an insurance company’s document request after a loss to your business.
Gina Clausen Lozier is a member of Berger Singerman law firm’s Dispute Resolution Team and focuses her practice on first and third party insurance claims and coverage analysis.
▪ This opinion piece was written for Business Monday of the Miami Herald and does not necessarily reflect the newspaper’s view.
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