BUSINESS INTERRUPTION • Prepare a sequence of events leading up to the loss and following the loss as soon as practical. The events sequence should include: − Descriptionof thelosswith chronologyof events including dates and time of occurrence, pictures,etc. (Example: power outage length of time, ingress/egress suspended by governmental authorities) − Descriptionof impactontheproperty andoperations,bothphysicalandfinancial impacts − Description of what will be done to minimizetheloss • Most business interruption loss calculations attempt to project what would havehappened had no loss occurred. Projections are often based on historical financial records (e.g., same time last year with adjustment for current growth or contraction trend).
− Each factor in a calculation needs to be documented. − Historical monthly income statements for the prior 2 years − Weekly revenue reports the prior year − Weekly gross margin report by customer for the prior year
• Factors common to business interruption losses include:
− Interruption Period — the length of time to repair or replace damaged or destroyed property, exercising due diligence − Earnings/Income Losses — the earnings or income which would have been achieved during the interruption period had no loss occurred − Earnings/Income Mitigation — actual earnings or income achieved through use of other property, locations, rescheduling, etc. despite the interruption − Determine best approach for measuring sales revenue losses and prepare monthly updates to claim estimate − Determine if additional BI losses stemfrom areas other than direct damage to insured property (e.g., customer/vendor damage/ interruption, loss-of-market share due to physical damage to insured, etc.). o If so, set-up procedures for documenting these losses (e.g., evaluation of losses by customer)
Page 113
Made with FlippingBook. PDF to flipbook with ease