How to Maximize Your Business Interruption Insurance Recovery

Each year nearly one in five companies suffers a catastrophic event that leads to two general categories of loss: physical property damage and business interruption (BI). Both are covered by first-party property policies. BI losses are less obvious and more complicated, but with knowledge and preparation companies can maximize their insurance recovery in the wake of this often large-scale loss.

It is vital to include a coverage lawyer on the crisis management team. Without that input, in the immediate aftermath of an event a company can easily take steps that severely and negatively impact its subsequent BI claim. A press release, for example, seeking to minimize the impact of an event can affect subsequent insurance claims. Coverage counsel can help craft a release that will reassure the necessary parties without compromising the claim.

Insurance brokers are a valuable resource and should be included on the emergency response team, but communications with them are discoverable. Thus, all event and claim-related documents and information must be filtered through counsel.

Internal accountants and bookkeepers are excellent resources, but often lack familiarity with first-party property insurance policies. That’s where forensic accountants come in. Failure to retain forensic accounting experts from the outset virtually guarantees insurance money will be left on the table.

When it comes to obtaining business interruption recoveries for catastrophic events, even simple mistakes can cost millions, but a little preparation goes a long way. General counsel are well-advised to plan ahead.