Posts tagged as:

extra expense

Utilities Can Be Unique in a Business Interruption Calculation

by John July 20, 2010

When quantifying a business interruption for an insurance claim, many expenses are easily identified as variable or fixed.  When I use the term variable, I mean that the expense changes with sales or production.  As a general rule, variable expenses are usually (but not always) saved and fixed expenses are usually (but not always) continuing.  [...]

Read the full article →

How to Document Employee Time Related to a Business Interruption Insurance Claim

by John May 20, 2010

All reports from Nashville indicate that the city, its residents, and businesses are working towards recovering from the terrible flood.  Companies that experienced a business interruption loss due to the flood may choose to use their own employees to perform clean up and repairs to the physical facilities.  If your business is using its own [...]

Read the full article →

No Good Deed Goes Unpunished

by John May 17, 2010

I recently worked with a company that had a fire at their R&D location that resulted in a business interruption loss. Amazingly, they had an endorsement that covered their continuing expenses without having to identify a corresponding loss of revenue. The insured made every effort to mitigate the business interruption, including attempting to have some [...]

Read the full article →

The Effect of a Revenue “Heartbeat” in a Business Interruption Loss

by John April 29, 2010
Thumbnail image for The Effect of a Revenue “Heartbeat” in a Business Interruption Loss

It is usually in the best interest of the insured, and the insurance company, for the insured party to mitigate a loss of revenue when there is a business interruption loss. In many cases, that mitigation is easily noticeable in a financial or graphical analysis, such as occurs in the example below. I call this [...]

Read the full article →

Is it a Saved Expense or is it a Witch?

by John April 21, 2010
Thumbnail image for Is it a Saved Expense or is it a Witch?

I love the Monty Python skit where a mob of peasants wants to burn a woman for being a witch. When the person making the decision asks, “How do you know she is a witch?” The crowd responds, “She looks like one!” Such is often the case with saved expenses in a business interruption claim. [...]

Read the full article →

What Happens When A Key Supplier or Vendor Goes Down?

by John March 26, 2010

Risk managers, business owners, and corporate officers ask me what will happen if they experience a business interruption loss because a key supplier or vendor is unable to fulfill an order.  They ask me, “Can I make a business interruption claim if my sales are affected because one of my key suppliers has a fire?” [...]

Read the full article →

How to Use the Correlation Coefficient in a Business Interruption Calculation

by John March 11, 2010

When preparing a business interruption calculation for an insurance claim, one of the most common statistical tools I use when evaluating continuing and non-continuing business expenses is the correlation coefficient. The correlation coefficient can be found using analysis tools found in spreadsheet software, using specialized statistics software, or by calculating the values with a pencil [...]

Read the full article →

Professional Services Firms Need the Right Extra Expense Coverage and a Rock Solid Business Continuity Plan

by John February 19, 2010

I am often asked to assist professional services firms, such as attorneys, accountants, engineers, and doctors, with estimating their business income values at risk.  My advice to professional services firms is often the same:  assume you will collect nothing for your lost business income.  I know that this advice sounds harsh and may seem shocking. [...]

Read the full article →

Lost Sales May Not Be Covered by a Business Interruption Insurance Claim

by John February 2, 2010

I hear this from clients a lot: “But we have business interruption insurance for our lost sales!  If we have business income coverage, doesn’t the insurance company have to pay us for our lost sales?”  This issue in particular can be really frustrating for risk managers, corporate officers, and business owners. I usually answer this [...]

Read the full article →