Expecting the unexpected is a key part of owning a business. In Florida, events like hurricanes and mandatory evacuations can force businesses to close temporarily. For some, this can mean losing thousands in daily revenue or needing to lay off valued employees in order to stay afloat during the closure. This is what the business interruption coverage in your business owner’s policy (BOP) should help prevent.
Assessing your lost income
Lost income in your business interruption insurance refers to the money your business would have earned if a covered event hadn’t interrupted your operations. When you file a claim, your insurer should be able to calculate this lost income as accurately as possible. They typically look at:
- Past financial performance
- Projected future earnings
- Seasonal trends in your business
- Economic conditions affecting your industry
- Ongoing expenses during the interruption period
- Cost savings due to the business closure
- Any income from temporary or partial operations
Make sure to keep detailed financial records for at least the past three years. These include profit and loss statements, tax returns and sales reports. It’s also important to maintain records of ongoing expenses like rent, utilities and payroll.
Common challenges
The exact calculation method for your lost income can vary depending on the specific policy terms. Oftentimes, an insurer may deny your claim or offer an inadequate settlement because they failed to account for:
- Variations in your income due to seasonal fluctuations, especially if your business is tourism-related
- Indirect losses due to hurricane preparations or mandatory evacuations, especially if a storm doesn’t directly hit your area or damage your property
- Economic factors and conditions specific to your area
- The lack of historical data typically used to prove potential earnings, particularly if your business is new or still growing
If your insurer disputes your claim, significantly undervalues it or offers a settlement that doesn’t cover your actual losses, consider working with an insurance attorney. They can help you interpret complex policy language and ensure fair treatment.
Protect your business
When insurance companies wrongfully deny or delay your claim, it can put your business at risk. Legal counsel can help you secure the compensation you deserve.