Business interruption claims are among the most complex for insurance adjusters to handle, especially after large-scale disasters.

These claims require more than just evaluating physical damages—they involve assessing the financial impact on a business’s operations. Understanding key considerations, avoiding common pitfalls, and following best practices are essential for navigating these intricate claims effectively.

Key Considerations in Business Interruption Claims

1. Policy Provisions Matter: Every business interruption policy is different. Adjusters must review the specific policy carefully, paying close attention to coverage limits, exclusions, and waiting periods. Confirming whether the policy covers partial interruptions (such as reduced revenue) or only full business shutdowns is also important.
2. Cause of Loss Documentation: Business interruption claims are triggered by a physical loss from a covered peril. Adjusters must thoroughly document the cause of the loss to ensure it aligns with policy coverage. Properly identifying the cause is key to a smooth claims process.
3. Financial Impact Evaluation: Calculating lost income can be challenging. Adjusters must analyze financial records, including profit and loss statements, revenue trends, and fixed and variable expenses. Working with accountants or forensic experts is often beneficial to ensure accuracy.
4. Consider Extra Expenses: Policies may cover additional expenses incurred to mitigate the loss, such as temporary relocation or operational costs during repairs. Adjusters need to carefully evaluate these costs to ensure they are necessary and connected to the covered loss.

Common Pitfalls to Avoid

• Overlooking Policy Details: Misunderstanding a policy’s terms can lead to incorrect claim assessments and disputes. Ensure you fully understand the policy specifics to avoid unnecessary complications.
• Inconsistent Documentation: Failing to maintain thorough and consistent documentation can result in issues during claim reviews. Make sure to document every step, from the cause of the loss to the financial impact, in a detailed and organized manner.
• Rushing the Assessment: Speeding through claims after a disaster is tempting, but rushing can lead to errors. Take the time to thoroughly assess the business’s situation, its revenue streams, and the true financial impact of the interruption.

Best Practices for Adjusters

• Maintain Continuing Education: AE21 offers continuing education (CE) courses and advanced training in claims handling that provide the necessary insights for managing these complex claims.
• Leverage Expert Resources: Collaborate with accountants, forensic experts, or specialists who understand the business you’re working with. These professionals can help ensure the accuracy of lost income calculations and contribute to a fair settlement.
• Communicate Clearly: Keeping the insured informed and providing regular updates on the process can help avoid misunderstandings. Clear communication throughout the claims process builds trust and ensures smoother resolutions.

How AE21 Can Help

Prepared adjusters make a greater impact. AE21’s continuing education and advanced training courses prepare adjusters for any situation they might encounter. With AE21’s support, adjusters can master even the most complex claims and continue advancing their careers.

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