Here’s a breakdown of the Business Interruption Insurance Claims Process, which helps businesses recover lost income due to a covered event like a fire, natural disaster, or government-mandated shutdown:
🔍 1. Understand Your Policy
Before filing a claim, carefully review your Business Interruption (BI) coverage:
- Covered events (e.g., fire, flood, civil authority orders)
- Waiting period (the time before coverage kicks in, often 48–72 hours)
- Coverage limits and exclusions
- Covered losses: typically includes lost profits, operating expenses, payroll, and sometimes extra expenses to mitigate loss
📞 2. Notify Your Insurer Promptly
- Contact your insurer immediately after the interruption begins
- Provide basic facts: what happened, when, extent of the damage
- Follow the notification procedure outlined in your policy
🧾 3. Document the Loss
This step is crucial and should be as detailed as possible:
- Financial statements (before, during, and after the event)
- Sales and revenue reports
- Expense reports (fixed costs, temporary costs, payroll, etc.)
- Proof of event (photos, repair estimates, news articles, etc.)
- Business continuity plans or contingency actions taken
📂 4. Submit a Formal Claim
Include:
- A detailed claim form provided by your insurer
- All supporting documents gathered above
- A narrative explaining how the interruption affected your business
📊 5. Work with Adjusters & Forensic Accountants
- The insurer may assign a claims adjuster and/or forensic accountant
- Be ready to explain how revenue was projected and losses calculated
- Maintain transparency and communication throughout
⚖️ 6. Negotiate & Finalize the Settlement
- The insurer will make a coverage determination
- If approved, they’ll offer a settlement amount
- You can negotiate the offer if it doesn’t reflect your losses
- Legal or accounting help may be advisable at this stage
💵 7. Receive Payment
Once agreed:
- Funds are typically disbursed in phases or lump sums
- Ensure all ongoing expenses are covered as agreed
🧠 Tips for a Smooth Process
- Maintain organized financial records at all times
- Create a loss timeline and journal the recovery process
- Engage a CPA or insurance claims consultant if the claim is complex
- Stay in frequent communication with your insurance contact
Would you like a sample claim checklist or a customizable template to track your claim?
