Business Interruption, Burden of Proof, and Typical Coverage
The first and the most important item to understand about this type of policy is that it’s intended to cover revenue losses incurred while your business property is being restored. In some cases, an extended business interruption policy may be in place that continues through the restoration and until the business gets back to its previous income level.
You may also have an extension to the standard policy called contingent business interruption insurance that applies to the loss of income stemming from physical property damage incurred in a natural disaster by business partners, suppliers, and product consumers.
When calculations about the compensation are being made, the insurer will need solid evidence of income loss and its connection to the damage sustained because of the hurricane. The burden of proof falls on the policyholder. To file a claim, a policyholder will have to gather information and evidence that proves the loss, such as-
- Financial statements
- Business tax returns
- Customer orders
- Information and statements from vendors, suppliers, business partners, etc.
- Market forecasts
- All other verifiable sources of financial information
- Media reports and articles about the losses resulting from the hurricane
- Damage and restoration reports
- Industry reports
- Reports from independent experts like accountants or statisticians
Gathering this evidence will take time, but it can do much to prevent unfairly denied business loss claims, unnecessarily delayed claims, and underpayments that do not adequately cover your losses.
Tips for Making a Successful Interruption Claim in Puerto Rico
The success of your interruption claim in the aftermath of Irma and Maria depends on several factors. In order to boost your chances of success, you may want to follow these steps:
- Communicate frequently with your insurer: maintaining a good relationship with representatives could make a difference when it comes to quick and efficient claims processing. Provide evidence and information as soon as it’s gathered, and make any new information immediately available to the insurance provider.
- Get clarification about the indemnity period – the timeframe during which the insurance protection applies. Usually, it will be from the date of the damaging event until the restorations are completed.
- Use a simple formula to determine the claim amount: net income loss + continuing expenses + additional expenses = business interruption compensation. However, you should be aware of factors that can take away from the straightforwardness of the formula – business seasonality, incomplete records or records lost in the hurricane, determining how much of the business can be transferred to the company’s other branches and predicting a change in demand following the natural disaster.
- File your claim as soon as possible. The sooner you contact your agency, the sooner your claim may be addressed.
Business interruption claims can be quite complex. If at any time during the claims process you need clarification or assistance, contact our firm. We can help you file your claim, gather the required documentation, and ensure your rights are protected throughout the process.