In the world of business insurance, many events may cause a party to have an insurance related claim. The professionals at White Elm have the necessary experience to assist in calculating the impact of those events. The following are a few examples of how a claim might come about.
Example Scenario: An insured business is damaged by a tornado. As a result, the business cannot operate at full capacity, and must outsource some of its operations. This leads to some hard questions for the insured business such as:
- Which revenues did the business lose?
- Can the business make up some of those revenues later?
- How were the business’ operating expenses affected?
- Could management minimize loss?
The business in this example may be able to submit a claim for lost business income. For those unfamiliar with lost business income, it can be a strange and mysterious concept. White Elm has professionals with extensive experience analyzing business interruption claims. We know the necessary information to determine the impact a loss has on a business’s revenues and expenses. We understand the underlying financial records, and know what questions to ask to interpret those documents correctly. We also know what industry data to use when calculating a loss of business income covered by the relevant insurance policy.
Example Scenario: An insured party’s action causes a fire, which makes it impossible for a third
party business to operate. That third party makes a claim against the insured party for lost profits suffered while the damaged business is being restored. In this scenario, some of the key questions might include the following:
- How much more revenue would the third party have but for the actions of the insured party?
- What expenses did the third party save due to the suspension of business?
- What operating expenses increased due to the loss?
- How much was the third party able to minimize their damages?
The third party in this scenario may be able to recover under the insured party’s general liability coverage. Calculating lost profits can be a complicated process with many steps. White Elm has many years experience calculating lost profits related to general liability coverage and civil litigation. Our professionals know those steps, and which industry and performance data to review in determining an impact on profits or value.
Example Scenario: A major manufacturing facility is being constructed. Fifty days before the project is to be completed, a piece of construction equipment explodes, delaying completion by months. The parties involved would likely need the following questions answered at a minimum:
- How much more is the builder going to have to pay in labor to complete the facility?
- How much more interest will there be on the construction loan?
- How much more money will be paid for property taxes during the delay?
- Will there be increases in utilities?
- What else will cost more in order to complete the project?
When a builder has a delay in their building project, there is a good chance they are losing money. Fortunately, the builder may have insurance coverage in place to help deal with this type of risk. Potentially, damages can come about for a variety of reasons such as natural disasters, contractor error, accidents, contract disputes, and material shortages. When a claim of this nature occurs, White Elm’s professionals have the technical expertise to determine the hard and soft cost impact.
Example Scenario: An employee with access to the company checkbook and records system sets up a fake vendor and begins paying himself for non-existent consulting services under the fake vendor’s name. Months pass, and the theft is eventually discovered. This type of event often leads to a many questions like:
- How much was taken?
- How was it taken?
- Why did it take so long to catch?
- Is anyone else doing this?
- Was he working alone?
- Where is the money now?
- Can the company get any of the money back?
If questions of employee dishonesty arise, White Elm has professionals well versed in the type investigation that must occur during the analysis of an employee dishonesty insurance claim. In addition to understanding the impact of coverage on the claim, White Elm’s professionals have extensive experience in the investigation techniques necessary to properly investigate such a claim. With this in mind, we can often help trace assets as they flow into and out of the company. This, in conjunction with understanding a company’s accounting and controls, helps us form a picture of which transactions are normal, and which are potentially fraudulent and damage causing.