© 2021 RSM US LLP. All rights reserved.
Business Interruption Claim Preparation
Assistance with the complexities of preparing and supporting business interruption insurance claims
Business interruption insurance policies provide a business with insurance coverage for an unexpected interruption of its earnings streams as a result of covered perils (e.g., natural and man-made disasters).
When a company is faced with the need to prepare a business interruption insurance claim, specific facts and circumstances should be carefully considered. Often company personnel are unfamiliar with the daunting requirements, analysis and support necessary to justify a business interruption claim.
Relying on external resources to execute the financial analysis has benefits, including:
- Access to specialized financial skill sets
- Understanding of your insurance adjusters’ needs and requirements that comes from the experience of having worked with many carriers
- Seamless collaboration with your team to allow you to focus on restoring your business operations and meeting customer needs
The RSM difference
The development of a business interruption claim goes beyond normal financial and accounting analysis and requires specialized skills. Specifically, understanding the complexities of your business is a critical component in effectively and accurately calculating your quantum of damages. RSM’s extensive work on behalf of, and in conjunction with, insurance carriers means we understand industry issues, concerns and language, which helps us better support you in establishing damages, communicating the basis for calculations and providing carriers with the underlying support they need to quickly resolve your covered claim.
A business interruption claim needs to answer the following unique questions:
- What is the proper measurement or projection of the lost earnings and the loss earnings period?
- How do you make a proper calculation of continuing and noncontinuing expenses (which can be different from the accounting concepts of fixed, semi-variable and variable expenses)?
- What expenses incurred during the business interruption (that would not have occurred during normal operations) can be appropriately included in a claim?
- What is the most appropriate way to value lost inventory (replacement costs or net selling values)?
- What is the value of, or loss of income from, damaged or lost fixed assets, including real and personal property?
- Do you need third-party assistance to provide real estate and market knowledge in establishing fair market rent for a rental income loss claim?
- Do your current resources have the experience and bandwidth to conduct the financial analysis and deliver the most accurate and supportable findings?
- What documentation will adequately reflect your efforts to mitigate losses, as required by your carrier?
For many companies, fixed assets and real estate are big ticket items on the balance sheet. Quantifying the loss around damaged assets, in particular, can be a significant portion of an organization’s claim. We have the market and industry knowledge, as well as access to public and private sources of data, to assist our clients in accurately assessing damages to property. For example:
- Most policies should cover the fair market rent of a real estate rental property. RSM works with clients, leveraging our knowledge of markets and lease rates for all property types, to assist a client in determining fair market rents for such claims.
- RSM has vast knowledge of equipment identification and market value issues to assist in assessing the value of damaged assets. We coordinate with our business damage professionals to identify and quantify the inter-relationship between a business and its underlying property and equipment.
This unique ability to provide a complete range of valuation services makes RSM the right choice to assist business owners with their damage claim assessments.
The right help at a moment of real need
When your organization faces significant financial loss from an unexpected interruption to your business, the risks are high. RSM’s professionals deliver the proven experience, objectivity and depth of resources you need when you need them most.
Our cross-functional approach combines experiences in financial investigations, valuation and insurance claims across a variety of key industries including construction, hospitality and financial services (specifically financial institutions and insurance). Our national platform provides the depth of resources needed for the specific nature of the matter with local resources in market to assist with your claim. Our complement of specialized skills that can assist in a business interruption claim assessment includes:
- Fixed asset valuation
- Real estate valuation
- Real estate fair market rent analysis
- Economic damages assessments
- Financial investigations
- Financial modeling
- Data analytics
- Intellectual property valuation
- Corporate recovery analyses
- Expert witness testimony
- Disaster recovery as a Service (DraaS)
- Data protection and backup
- Business continuity and disaster recovery planning
- Business continuity plan assessment
- Finance and accounting outsourcing
- Cloud strategies and solutions
- Infrastructure as a Service (IaaS)
We help clients across a wide range of industries and markets, both domestic and international. At RSM, we are dedicated to assembling project teams with the right blend of knowledge applicable to the complex requirements of each investigation.