There is a saying that nothing focuses your attention on your insurance policy as much as a casualty, and Hurricane Irma will certainly force business owners to focus on the terms of their insurance policies. The disruption in operations caused by Hurricane Irma can be devastating to the financial stability of a business, and these business interruption losses are in addition to any property damage. Hopefully, South Florida owners were prepared and had the proper insurance coverage in place to ease the financial burden.
Although the applicable terms and conditions of the insurance policy will control the mutual rights and obligations of the business and its insurance company, below are some of the most frequently asked about topics we have been receiving to assist South Florida businesses in this process.
Business interruption coverage: The purpose of business income coverage is to compensate a business during a period of interruption for what the business would have earned had no loss occurred. Generally speaking, this coverage compensates an insured for the actual loss of business income during the period of restoration that results directly from the necessary total or partial interruption of your business. It also includes any necessary expenses you incur during the period of restoration to reduce the amount of loss under the policy.
Period of restoration: The period of restoration defines how long the insurance company is obligated to issue payment for business interruption. The period of restoration typically begins at the time of the event and continues to the earliest date the physical damage is repaired or replaced; the date of which such damage could have been repaired or replaced with the exercise of due diligence and dispatch or; the date operations are resumed at a new permanent location. Some policies contain a waiting period before you are entitled to coverage, so it is important to become familiar with your policy conditions.
Accelerating business income claims: First and foremost, report your claim to the insurance company to initiate the claim adjustment process. It is also crucial to identify all operations required to resume your business and take reasonable efforts to resume operations. It is up to you to substantiate your loss and you should be familiar with your finances and projection of sales. It is also prudent to start gathering documents to support your loss because the insurance company will require certain records to evaluate your claim. These records may include basic accounting records, production records (patient charges/billable hours), cash receipts/collection, detailed profit and loss statements, tax returns, sales journals, payroll journals, general ledgers, inventory reports and rental lease agreements. You have an obligation to produce records to the insurance company and having these documents readily available will expedite the claim process.
Businesses that had to shut down before Hurricane Irma: To qualify for coverage, the property must sustain a covered loss which causes an interruption or suspension of business as well as an actual financial loss. Generally speaking, physical damage must prevent normal business operations. However, every policy is different and may provide additional coverages for the suspension of your business due to evacuation orders, loss of power, and inability to access the property. It is important to speak with an experienced professional to review your policy and advise you of your rights.
The insurance claim process can be overwhelming and time consuming. It is important to familiarize yourself with the terms of your policy and to retain experienced professionals who will make sure you maximize your entitlement to and the amount of benefits that are due and owed in order to get your business back up and running.
Michael J. Higer and Gina Clausen Lozier are insurance litigation attorneys with Berger Singerman LLP representing policy holders.