How to File Your Business Income Claim
Norcia Insurance Consultants is encouraging all businesses that had their business closed or impacted based on the executive order of the Governor to file an immediate claim with their insurance company.
Norcia Insurance Consultants is here to assist in completing the process and compiling your claim.
The key to surviving a catastrophic loss, which this COVID-19 pandemic is, can depend as much on whether the business has business interruption protection as it does on having traditional, general insurance. Business interruption, or loss of income insurance, protects business revenue according to the type of coverage and coverage limits that a business owner chooses. Because compensation calculations can be complicated and difficult to understand, the time to clarify the claims process is before rather than after a covered loss occurs.
Review Policy Terms
Conduct a thorough review of your policy and compare what it covers against what you lost or expect to lose. Get expert assistance to help both in reviewing the terms of your policy and in filling out your claim. Look first in the “Loss Settlement Fees” section of your policy to see if it includes coverage for expert assistance fees. Then, check to see how your policy defines business interruption insurance, what the policy specifically includes and excludes, and whether it has a time-based deductible called an elimination period.
Notify your insurance company as soon as possible after incurring a loss. Most require notification within a specific period followed by a sworn proof of loss statement, or they will invalidate your subsequent claim. A notice of loss statement describes the circumstances surrounding the loss. A proof of loss statement documents the loss in detail. Requirements typically include a statement as to how the loss is affecting business operations, whether the impact is partial or total, and an estimate of how long you will need to continue paying employee wages.
Loss Mitigation Plan
Problems with loss of business income claims often arise from providing an unrealistic or inaccurate recovery period. Insurance companies expect (and most often require) you to submit a mitigation plan that includes a time frame for recovery and outlines steps you are taking to keep losses from escalating. For example, this can include temporarily relocating the business, renting equipment, salvaging what you can and determining how long it will take to replenish destroyed inventory items. Set up a computer spreadsheet or a manual list to document and track costs for repair, cleanup and other related expenses your insurance company will allow you to claim. You may want to include temporary location rent, transportation expenses related to temporary relocation as well as marketing and advertising for the temporary location.
Gather financial and legal documentation and fill out the claim form according to insurance company instructions. The list of required documentation can, for example, include your business plan, financial statements for the previous three to five years, personnel files and employment documentation, and customer and supplier lists. Claim forms also require calculations that determine lost profit and extra expenses. Lost profit is the difference between lost sales revenue and saved expenses — those you would normally incur in the normal course of business, but because the business is “down,” you are not incurring them. Extra expenses are costs directly related to cleanup and repair.
Contact Norcia Insurance Consultants
Please contact Norcia Insurance Consultants for a free consultation at (952) 412-7200 or fill out our form for more information.