BUSINESS INTERRUPTION CLAIMS COVERAGE – BASIC CONCEPTS

Willis Risk Control and Claim Advocacy Practice

March 23, 2015

Speakers

John BoboSouth Region Technical Claim Manager Willis North America

Bill Warren, CPA, CGMAPartner-in-ChargeRWH Myers, Atlanta, GA.

Agenda

• What is Business Interruption insurance?

• What triggers Business Interruption coverage?

• How is a Business Interruption loss measured?

• Additional Coverage's

• What to do when a loss occurs

What is Business Interruption Insurance?

• provides for the maintenance and stability of the income (revenue) statement, comparing projected results with actual results after a loss. “Do for the organization what it should have done for itself, had no loss occurred.

• DOAS will reimburse the Actual Loss of Income Sustained, less any non-continuing expenses and charges…..

• Must have a Property Trigger – must be a covered loss to a covered location under the policy

• “must be to insured property by a Covered Cause of Loss”

• Loss Measurement (clarification between BI and Extra Expense)

• Deductibles and Retentions – “72 hour waiting period”

What Triggers Business Interruption Coverage, and how is the loss measured?

Additional Coverage's

• Extra Expense – “reasonable and necessary extra expenses”

• Rental Value – “loss sustained”….due to unlivable conditions.

What to do When a Loss Occurs

• Report the claim as soon as possible to DOAS

• Segregate charges associated with the loss to a special account or work order code, grouping like items

• Provide good descriptions of all work performed and expenses incurred

• Gather all supporting documentation

Coverage Wording

Business Interruption and Extra Expense

• DOAS will reimburse the Actual Loss of Income Sustained, less any non-continuing expenses and charges, resulting from direct physical loss, damage or destruction to insured Property by a Covered Cause of Loss after a 72 Hour Waiting Period

• DOAS will reimburse the reasonable and necessary “extra expenses” incurred by a Covered Party resulting from direct physical loss, damage, or destruction to insured Property by a Covered Cause of Loss contained in this Agreement not to exceed the greater of $50,000 or 15% of the total insured property values in BLLIP affected by the covered loss occurrence.

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