The hurricanes may have passed, but a complicated insurance claim process remains
The hurricanes may have passed, but a complicated insurance claim process remains
Insight

The hurricanes passed, but a complicated insurance claim process remains

How will businesses in Texas, Florida and Puerto Rico, reeling from three of the most destructive hurricanes on record, get the financial assistance they so desperately need?

This post is one of a multi-part series highlighting our commitment to assisting individuals, businesses, and state and local governments as they work to address the financial needs that inevitably accompany natural disasters.

Many companies are organized operationally following a disaster—whether natural or due to human error or intent—but we’ve found over the years that few are prepared to move forward from accounting, financial or legal perspectives.

With so many businesses in Texas, Florida, Puerto Rico and the U.S. Virgin Islands overwhelmed by the destruction wrought by Hurricanes Harvey, Irma and Maria, it’s appropriate to explore the compensatory aspect of recovery—and that typically starts with a commercial  insurance claim.

The period immediately after a catastrophic event is difficult personally and professionally. We have worked on insurance claims in the tens and hundreds of millions of dollars for companies in numerous industries as a result of all manner of disasters.  We coordinate with managements’ recovery plans, compile cost data and help quantify economic and financial losses.

Whether the company has experienced business interruption, property damage, inventory loss, some other expense, or all of the above, the claim process is complex and often entails submitting a separate claim to state or federal agencies such as FEMA. There are a lot of moving parts, as you can see below.

 

Property damage

Review and analyze insurance coverage policies

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Identify and evaluate real and personal property damages (e.g. facility damages and inventory losses)

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Identify and evaluate additional physical losses (e.g debris removal, demolition, and increased cost of construction)

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Identify and evaluate additional physical losses (e.g. debris removal, demolition, and increased cost of construction)

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Coordinate claim program with managmement's recovery plan

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Compile and organize costs and supporting documnetation

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Categorize and verify expenses incurred as a result of the incident

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Identify potentially uninsured damage amounts

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Compile supporting documentation

Business interruption loss

Evaluate the lost profits and sales during the loss period

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Evaluate and analyze industry data, market demand and trends

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Understand and evaluate direct and indirect cost savings

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Review historical operational financial records

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Assist in reviewing financial projections

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Prepare business interruption valuation report

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Calculate damages solely attributable to the incident

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Compile supporting documentation

Extra expenses

Compile and verify the additional costs incurred as a result of the incident

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Set up ERP and accounting systems for tracking additional costs incurred as a result of the incident

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Identify period of indemnity

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Review and analyze expenses incurred during the recovery period

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Compile and organize extra expenses supporting documentation

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Quantify incremental personnel expenses (e.g. overtime, additional expenses incurred for hourly employees)

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Identification of potential residual value

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Compile supporting documentation

One of the most prudent things to do post-disaster is to review and thoroughly understand your organization’s insurance policy to determine the coverage provided to you to recover losses.  Consider Superstorm Sandy in 2012, you might assume most of the property damage was attributable to the massive flooding in and around New York City when in fact it was due to the many power outages in the area.  Policy language pertaining to deductions, limitations and periods of loss is quite different for power outages versus flooding.  It’s an important distinction that should considered by the organization while conducting their assessment.

In the world of insurance claims, continuous dialogue between the relevant parties is critical. Frequent and strong communication during the recovery process can ensure that everyone is up-to-speed about the various issues and facilitate a meeting of the minds, which can lead to an efficient and effective claims process.

To learn more about our commitment to people, businesses and communities, in good times and bad, visit our Recover and Rebuild site.