If your insurance company denies your business interruption claim or even underpays it, it will seem like all hope is lost.
When you own a business, there are a lot of people who depend on you. Your employees pay their bills through the work they do. Your family depends on the company running operationally to live with peace-of-mind. You have your loans and costs to take care of on top of all those people.
If a natural disaster or unexpected catastrophe destroys your place of business or damages your business, all those previously mentioned things are left out to dry. If your business cannot operate and produce revenue, no one in your circle can live with peace-of-mind.
These occurrences are why business owners need business interruption insurance. In some cases, your insurance company will help pay for the costs associated with halting your operation.
However, this isn’t always the case. Business owners consistently find themselves with denied claims and faced with financial ruin. If this sounds like your case, Scott, Vicknair, Hair & Checki, LLC is here to help.
What is Business Interruption Insurance?
Business Interruption Insurance is an additional policy business owners can buy on top of their regular property and casualty insurance. Sometimes it is included in the policy as a specific coverage. The policy protects lost income in the case of natural disasters or other catastrophes.
Most business owners are incentivized to add business interruption insurance because it is tax-deductible. BI insurance is like any other business expense, especially for people who operate businesses in coastal states like Louisiana.
Business Interruption Insurance won’t pay for the costs of repairing the physical location of your business. Additional flood, hurricane, and fire damage insurance will cover those costs.
What Does Business Interruption Insurance Cover?
Business interruption insurance covers costs associated with lost income. Lost income can cover a large umbrella, so it’s essential to know where a business owner can recoup their money. Here’s a list of some of the ways you can recover lost income:
- Profits: An analysis of the previous months’ business income may determine how much an insurance company will payout.
- Fixed Costs: Receipts from operational costs and incurred expenses will help determine what you can recoup.
- Temporary Location: Your insurance company should help pay rent for a temporary location of a business.
- Commission and Training Costs: This allows a business to replace machinery and retrain employees if the equipment is new.
- Extra Expenses: Any costs beyond the fixed costs of running a business should get coverage from your insurance company.
- Civil Authority Ingress/Egress: In the event of a government mandated-curfew or street closure, business interruption insurance can cover lost profits from these closings.
- Employee Wages: Insurance should help cover payroll in addition to other costs with a halt in production.
- Taxes: A business interruption policy should cover some of the taxes associated with running a business during the interruption period.
- Loan Payments: A business interruption policy should cover any small business loan payments you owe while your business is not running.
It’s essential to read your policy and make sure your premiums cover all these associated costs.
What if My Business Interruption Claim is Denied?
If your business interruption claim is denied, it’s essential to understand why your insurance claim was rejected. Your insurance company may give any of the following excuses:
- The claim was not timely
- Compensation isn’t covered
- Insurance company suspects fraud
It’s at this point you need to look for a business property and casualty insurance attorney. You’ll need to make sure you find an attorney who has experience dealing with the specific insurance companies who cover business interruption. An attorney can also try to get you more compensation if you have been paid something, but not enough.
What should I Write in an Appeal Letter?
You’ll want to have an attorney retained before you file an appeal to the insurance company. A person with no experience dealing with an insurance company could make critical mistakes in their appeal.
An experienced business insurance claim lawyer should know what language to use in an appeal. They’ll also make sure all communication with the insurance company goes through the firm, not you. Insurance companies love to use your words against you in court.
Always remember: Insurance companies do not want to pay out your claim. If insurance companies paid out all their claims, they’d be out of business.
How to Calculate Business Interruption Loss
Insurance companies use a specific formula for calculating business interruption loss. It goes as follows:
BI = T x Q x V
- BI – Business Interruption
- T – Total Time Business is shut down
- Q – Quantity of goods regularly produced
- V – Value of all units of production
Business Interruption (BI): This will be the total amount owed to a business owner once all factors have been determined.
Time Shut Down (T): This variable doesn’t just factor in the total amount of time lost by a business. The value of the time can also be a factor, making (T) the most challenging element to decide in business interruption cases.
Quantity Produced (Q): Numbers in quantity can be relatively straightforward. Some complications will arise when an adjuster has to predict production levels for future earnings.
Value of Production (V): This will take into account the amount of all units of product, gross margin, and saved expenses.
This is where an attorney can be a critical asset in your claim. These negotiations are essential for securing the proper compensation for your business loss. Even though it seems like simple math, it is complicated if you want to get the most money possible. An attorney can help you with these calculations and fight for the most compensation to which you are entitled.
Who Can I Contact When My Insurance Company Has Denied My Claim?
You need to contact the business property and casualty insurance lawyers at Scott, Vicknair, Hair & Checki, LLC when your claim is denied. Our team has experience dealing with all types of insurance companies across the country.
Whether a hurricane damaged your business, or it was halted by a fire — you are owed protection from your business interruption policy. Don’t let your insurance company withhold that from you — people depend on your business running at full operation. Moreover, if your insurance company is refusing to pay your claim in bad faith, you may have a bad faith insurance claim.
Call Scott, Vicknair, Hair & Checki, LLC at (504) 493-7519 or visit the New Orleans office at 909 Poydras St, Suite 1100. Scott, Vicknair, Hair & Checki, LLC has got your back!