A business interruption insurance policy is meant to protect an organization from any financial losses suffered because of a compromise in its normal operations. Some of the things that could interrupt the smooth running of a business include natural disasters like hurricanes, nationwide blackouts, and so on.
Such occurrences can make it difficult for a business to pay its employees, and pay loans besides meeting its financial obligations or targets. That is why you should have a comprehensive business interruption cover that will sufficiently help you out of any hardship that you may encounter along the way.
However, you deserve fair compensation if your business operations are interrupted in any way. For that to happen, you ought to be familiar with how to file a business interruption claim. The compensation from your insurance provider will provide relief and restore you to your initial financial position before the interruption. Here is a detailed guide on how to file business interruption claims.
Step 1: Find Out What the Policy Covers
To make a successful business interruption claim, you first have to assess your policy thoroughly. This will help you ascertain what risk is insured to get fair compensation. Different insurance companies have different policies that cover different risks. Some policies highlight every peril that they cover. It is crucial to ascertain the type of risk covered by the policy as well as the coverage duration.
Step 2: Evaluate Whether the Lost Income Can Be Balanced In Upcoming Earning
Evaluating the amount of income that your business has lost because of interruption is tricky but vital in filing for the claim. The primary goal of the business interruption policy is to protect against losing earnings whenever your business operations are suspended because of a certain underlying risk that is covered like floods.
Therefore, any lost earnings that are not balanced by future or imminent income should be covered by the business interruption policy. In addition, if it is not balanced by imminent earnings then you have to come up with an estimation of the business interruption.
Step 3: Estimate the Restoration Period
Next, you have to determine the restoration period. Essentially, it is the time that it will take to repair, reinstate, replace or restore an insured business to its initial financial position. The benefits of a business interruption policy are often provided within the restoration duration.
Furthermore, the restoration period may begin right after the occurrence of the unfortunate incident or it can take up to 72 hours to begin. Likewise, the restoration period will come to an end after the restoration of the insured business. The length of the restoration period is crucial in the calculation of losses incurred due to business interruption.
Step 4: Calculate the Impact and Amount of the Revenue Lost
After ascertaining the restoration period, you now have to calculate the amount of revenue lost as well as its impact on the business. That will go a long way in determining the amount of compensation that you are bound to receive from your insurance provider.
Step 5: Apply the Deductible Percentage to Create a Final Business Interruption Loss
The final step in filing for a business interruption claim is to utilize the deductible percentage which is incorporated within the policy’s declaration page.
File Your Business Interruption Claim Accordingly
Filing business interruption claims is not an easy task. You should contact a public adjuster to help guide you through the process and evaluate your loss accurately along with your covered property damages.