Business Interruption and Related Claims

Weaver professionals can help measure the business interruption.

Business income insurance is designed to cover actual operating losses sustained or the net profits of the business. Business interruption coverage which may be referred to by other names such as “Time Element” and “Business Income,” is often part of a commercial property policy and will usually be triggered when a covered cause of loss interrupts normal operations resulting in financial and economic losses. When a loss event occurs, policy holders and insurers often turn to independent accountants to measure the business interruption loss as due under the policy. Weaver has seasoned professionals that have decades of experience and accounting acumen assisting policyholders, insurers and related legal counsel. Many Weaver professional have advanced degrees and/or certifications such as CPA (Certified Public Accountant), CFF (Certified Fraud Examiner) and CFF (Certified in Financial Forensics) and have cumulatively participated in thousands of successful settlements.

Related Claims

Although, business interruption coverage is generally designed to be triggered after a “direct physical loss of or damage to the insured property,” related coverages may also be triggered without direct property damage. Related coverages may include:         

  • Contingent business interruption – Contingent business interruption coverage is intended to cover lost business income of the policyholder caused by disruptions in operations of its customers or suppliers due to a covered cause of loss.
  • Civil authority clauses – Some commercial property policies include a civil authority clause, which provides coverage for losses resulting from a governing authority prohibiting or impairing access to the insured business premises. 
  • Stand-alone supply-chain coverage - Some policies might also have stand-alone supply-chain coverage that is also designed to cover losses caused by disruption in the insured’s supply chain, but is broader than contingent business interruption coverage because most supply-chain policies do not require property damage and have fewer exclusions. 

Some policies also cover business interruption for event cancellation and cyber-attacks, with differing exclusions.

Weaver’s Experience

Weaver professionals have assisted, prepared and presented complex business interruption losses under the terms of applicable commercial insurance policies while streamlining the recovery process. To recover under business interruption or related coverage, it is essential that the policyholder show the lost net profits that were caused by a covered cause of loss and not by some other intervening factor or factors. These are often referred to as non-cause-of-action factors. This step may be one of the more challenging elements in the policyholder’s business interruption claim model and one of the more time consuming verification analyses performed by insurers. These models are often very sophisticated with detailed analyses.

Weaver uniquely combines forensic accounting and valuation acumen in a broad spectrum of industries with years of claim’s accounting experience to address our client’s needs. A proper business interruption claim analysis is more than just a simple number crunching exercise. Thorough and thoughtful analyses are required to understand the revenue and expense drivers of an industry, as well as, for a particular policyholder’s business. It is important to fully understand the impact of concepts such as mitigation, sales value of inventory, loss vs. delay, and production loss vs. sales loss, among other concepts that may be included in the business interruption claim model for both the industry and the specific policyholder’s current business operations.

Our team has decades of experience measuring the economic impact resulting from the disruption of business operations involving businesses across a wide range of industries including, but not limited to:

  • Petrochemical and Refining
  • Oil and gas / Energy
  • Manufacturing
  • Construction
  • Transportation
  • Maritime
  • Logistics and distribution
  • Retail
  • Hospitality
  • Healthcare
  • Professional services

Transparency and responsiveness is our goal. We help our clients with development of an overall claim strategy for a successful claim submission. Some view the policyholder and insurer as potential adversaries, however, a transparent and responsive approach to submitting the business insurance claim can enhance credibility and reduce the possibility of the claims process becoming adversarial or needlessly drawn-out.

We work with both policyholders, as well as insurers in calculating quantum damages and assessing claims. The coverage is designed to put the insured in the position they would have been in had the covered event not occurred and is not intended to be a windfall to the insured. Our measurement of business interruption loss, extra expenses and any other related claims is not affected by the party striving to properly recoup every dollar of covered loss or the party striving to not pay more than what is due.

Karl Schwabauer

Karl Schwabauer

Managing Director, Forensics and Litigation Services

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Karl Schwabauer, CPA, CFF, CVA, has extensive experience providing forensic accounting, economic damage assessment and valuation…

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