The destruction in the wake of Hurricane Harvey has shown the devastation that a natural disaster can bring. As a business owner, it is necessary to acknowledge and plan for the potential risks.
The key to surviving any natural disaster is to restore normal business operations as quickly as possible and business interruption insurance plays a critical role in accomplishing this. The purpose of business interruption insurance is to place the insured in the same position as if the interruption hadn’t occurred. In order to receive the appropriate benefits called for by the insurance policy, it is necessary to file an insurance claim.
Here are six ways valuation professionals can help with insurance claims:
- Determining the scope of coverage. Resolving scope-of-coverage issues up front is critical. For example, does the business interruption policy cover extraordinary expenses, such as the cost of operating at a temporary location? Does it cover “denial of access” losses? What sort of rebuilding costs are covered?
- Estimating losses. Developing an aggressive, yet reasonable, “proof of loss” claim smooths the claims process, improves the chances for a speedy recovery and supports requests for advances from the insurer.
- Defining income. Policies generally reimburse the insured for “lost business income,” which leaves some room for interpretation. A valuation professional can educate the insurer about the business and its finances, project future income, and calculate continuing and noncontinuing costs.
- Mitigating the loss. There are many mitigation strategies, but not all of them make good business sense. A company might be able to cut costs by laying off staff, for example, but this might slow its recovery in the long run. A valuation professional can help develop and support reasonable mitigation strategies.
- Establishing the loss period. Generally, the loss period is the time required, with due diligence, to rebuild, repair or replace damaged property. A valuation professional can help establish the proper loss period, thus maximizing the client’s recovery.
- Proving damages. Whether a client is seeking recovery from an insurer, a responsible party, or both, a valuation professional can help calculate and support its damages claims. The valuation professional can, with credible, reliable and consistent testimony and documentation, establish the amount of a claim for damages.
To bounce back after a business interruption, taking quick action and putting together an estimate of loss and a well-documented claim is key. Early involvement of a certified valuation professional improves the chances for a full, speedy recovery.
For more information on business valuation Rob Metcalf at 816-743-7700.