Tag Archives: Period of Restoration

Period of Restoration – Valuing Business Interruption Claims, Part I

Business interruption coverage is very valuable to many policyholders in the wake of Hurricane Michael. Florida business owners may seek coverage under their commercial insurance policies for business interruption, which indemnifies them for lost earnings and expenses if their businesses are partially or totally interrupted as a result of Hurricane Michael. Business interruption coverage is … Continue Reading

Business Interruption Claims – Calculating The Period of Restoration

Business interruption coverage provides protection against loss of income when a business suffers property damage from an insured peril (e.g., fire, water loss) that interrupts the operation of the business.1 A typical business interruption policy form provides that the insurer will pay the actual loss of business income the insured sustains during the necessary suspension … Continue Reading

Certain Coverage Disputes Under New York Law May Not Prevent An Appraisal Demand

Under New York law, certain coverage disputes may not prevent appraisal. You may have heard the general rule that issues involving coverage disputes under an insurance policy are purely legal issues that should not be determined by an appraisal panel. Appraisal in the property insurance context is meant to resolve a disagreement over the amount … Continue Reading

Hurricane Sandy Business Interruption Claims Are Broadly Measured in New York

Hundreds of thousands of businesses are still struggling to repair the damages caused by Super Storm Sandy. In New York, claimants will be told that their policies only cover business income losses during the period of time that it would take a “reasonable business” to return to its pre loss operational performance and that repairs … Continue Reading

Discredit Makeup, Offsets and Residual Values Claims with a Precise Measurement of Income Loss – Understanding Business Interruption Claims

Business interruption claims are typically evaluated in two phases. Claim professionals will first determine the period of indemnity (a.k.a., period of restoration) and then measure the loss of income by reviewing the business’ income and expense trends and future projection charts.… Continue Reading

The Period of Restoration – Fact or Theory? – Understanding Business Interruption Claims

“Lost time is never found again”– Benjamin Franklin Business income coverage is supposed to protect a business’ net income and operating expenses while its operations are suspended as a result of loss or damage caused by a covered peril. An unexpected interruption of productivity for a period time can be devastating for a business. And … Continue Reading

Ordinary Payroll Coverage Can Be Extraordinarily Tricky- Understanding Business Interruption Claims

When measuring a business income loss, a company can treat all payroll and benefits (if directly related to payroll, i.e., FICA, worker’s compensation, etc.) as “continuing expenses” in its accounting worksheet as defined in CP 00 30 10 (Business Income and Extra Expense Coverage Form). If the policy has an Ordinary Payroll Exclusion or Limitation, … Continue Reading

Incurred Expenses May Be Recovered Outside of the Period of Restoration – Understanding Business Interruption Claims, Part 94

Insureds have a contractual obligation to mitigate damages after a loss occurs. Most businesses take drastic measures to resume operations swiftly and will spare no expense in minimizing the down time. In a market where delays are not tolerated and consumers are ever more demanding, the efforts to resume operations are more akin to survival … Continue Reading

How a Grand Forks Business Owner Bought More Time — Understanding Business Interruption, Part 74

Time is often the most important and controversial element in evaluating a business income claim. Determining an adequate Period of Restoration is sometimes as counterintuitive as solving a quantum mechanics formula. In the book, Business Interruption – Coverage, Claims and Recovery, 2nd Ed. (2011), the authors illustrated a real world challenge in determining an adequate … Continue Reading

Location, Location, Location – Understanding Business Interruption Claims, Part 51

Despite the emergence of global markets and internet economies, physical location is probably the most important factor for the success of many businesses today. Therefore, when a catastrophic loss occurs, many business owners are faced with the tough decision of rebuilding or replacing the property at the same location or relocating the business elsewhere.… Continue Reading

Not All Businesses Are Alike – Understanding Business Interruption Claims, Part 49

In today’s world, business models are limited only by our imagination. Transforming an idea into a business reality is probably one of the most rewarding achievements in our society. However, not all businesses are alike and, as such, not all business interruption claims should be put through the same rigors. While most business income policies … Continue Reading

Considerations Regarding Ordinary Payroll – Understanding Business Interruption Claims, Part 43

A recent IRMI article titled “Limiting the Interruption in Business Interruption” discussed the importance of considering payroll during the risk assessment phase of obtaining business insurance coverage. The forms regarding business income and ordinary payroll are hyperlinked for ease of use and understanding.… Continue Reading

Can a Commercial Lessor’s Actions be Considered in Determining a Period of Restoration? — Understanding Business Interruption Claims, Part 27

A standard business interruption form reads: We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your “operations” during the “period of restoration”. The suspension must be caused by direct physical loss of or physical damage to property at the “scheduled premises”…caused by or resulting from a … Continue Reading

Can “Real World Circumstances” Be Considered To Establish a Theoretical Period of Restoration? – Understanding Business Interruption Claims, Part 26

The “Period of Restoration” in a business interruption claim is a concept of time. The period, as defined in most ISO forms, begins at the time of “direct physical loss or damage” and ends on the earlier of “the date when the property should be repaired, rebuilt, or replaced with reasonable speed and similar quality.” … Continue Reading

Extra Expense and the Period of Restoration – Understanding Business Interruption Claims, Part 22

(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the part of a series she is writing on business interruption claims). Most extra expense provisions state that coverage will be extended for necessary expenses that the insured incurs during the “period of restoration.”… Continue Reading
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