Business Interruption Insurance Claims
Property coverage rebuilds the building. Business interruption covers what the building was earning while it could not be used — and it is proved from your accounting records, not from the damage. That is why two businesses with identical damage can recover very different amounts.
What business interruption actually pays
Broadly, the income the business would have earned during the period of restoration, plus the expenses that continue whether or not you are trading — rent, debt service, key payroll, insurance. It is not a payment for the damage; it is a reconstruction of the trading you lost.
Extra expense is separate and often under-claimed: the cost of continuing to operate at all. Temporary premises, expedited freight, equipment rental, overtime, moving costs, notifying customers. Money spent to reduce the interruption is frequently recoverable even where it exceeds what it saved — check the wording.
The period of restoration is the whole argument
Almost every serious BI dispute is really a disagreement about dates. The policy defines the period of restoration — typically running from the date of loss until the property should reasonably be repaired or replaced, with reasonable speed and similar quality.
Note the word should. It is a hypothetical, not a diary. A carrier can argue the rebuild ought to have taken less time than it did, and pay only the shorter period. Permit delays, long-lead equipment, contractor availability and code-required upgrades all push the real timeline out, and every one of them has to be evidenced rather than asserted.
Two related provisions worth finding in your policy:
- Extended period of indemnity. Trading rarely returns to normal the day the doors reopen. This extends cover past the repair date while you rebuild custom.
- Waiting period. Many BI forms carry a time deductible — the first stretch of the interruption is not covered. It is expressed in hours or days and it varies; ask your insurer in writing what applies to your policy.
Where the number gets cut
- The sales trend used. A carrier may value the loss on a flat prior-year figure where the business was demonstrably growing, or ignore seasonality that a monthly comparison would show.
- Expenses treated as non-continuing. Costs you actually still paid — or had to pay to preserve the business — written off as saved.
- Payroll. Whether key staff are treated as a continuing expense or a saving materially changes the total, and some forms schedule payroll separately.
- A shortened period of restoration, per the section above.
- Coinsurance on the BI limit itself, not only on the building.
- Extra expense recategorised as ordinary operating cost.
Coverages that reach beyond your own building
Damage elsewhere can interrupt you, and several extensions address it. Whether you carry them, and at what limit, is on your declarations page:
- Contingent business interruption — loss caused by damage to a supplier or a major customer.
- Civil authority — loss when an official order prevents access to your premises. Usually tied to nearby physical damage from a covered peril, and usually time-limited.
- Ingress/egress — loss when access is physically blocked.
- Leader property — loss when damage to a nearby anchor business cuts your footfall.
What to document, starting now
- Monthly profit and loss for at least the prior two to three years, plus the current year to date — enough to show trend and seasonality rather than a single annual figure.
- Tax returns, sales-tax filings, payroll records and bank statements that corroborate them.
- Orders, bookings or contracts that existed at the date of loss and were lost.
- A dated log of every step in the repair timeline — permit applications, contractor bids, equipment lead times. This is the evidence for the period of restoration.
- Every extra expense, with receipts, and a note of what it was intended to avoid.
Get an accountant involved early. A BI claim is an accounting exercise with an insurance wrapper, and the quality of the records is usually the single biggest determinant of the outcome.
Who to call, and what each one costs
Your insurance companyFree
First call, always. They assign an adjuster and issue any advance. The catastrophe adjuster assigned to you may be genuinely helpful — they also work for the insurer, which is a fact about the role, not an accusation about the person.
Your state Department of InsuranceFree
The most underused resource after a loss. They answer coverage questions, take complaints about claim handling, and confirm whether anyone contacting you is actually licensed. No cost, and they take no percentage of your recovery.
A public adjuster (that’s us)Paid
Represents you rather than the insurer, normally for a percentage of the claim agreed in writing before any work begins. Useful on scope disputes, contents inventories and undocumented depreciation — and not worth it on a small claim or a pure coverage dispute. See the questions below.
An attorneyPaid
Attorneys are there to litigate claims. That is the difference: a public adjuster works out the amount of the loss and negotiates it with the carrier; an attorney takes the carrier to court. If the carrier says the loss is not covered at all, or there is a question about causation or accusation, that is litigation and it belongs with a lawyer. A public adjuster is not a lawyer and cannot give legal advice.
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Common questions
How is a business interruption claim calculated?
Generally from your financial records: the income the business would have earned during the period of restoration, less expenses that genuinely stopped, plus expenses that continued. Because it is reconstructed from the books, organised monthly accounting support matters more than anything else.
My business was not damaged, but I could not trade. Is that covered?
It may be, under extensions such as civil authority, ingress/egress, contingent business interruption or leader property. Each has its own trigger and its own limit, and most require physical damage somewhere from a covered peril. Check your declarations page for which you carry.
The carrier says my repairs should have taken less time. Can they do that?
The period of restoration is usually defined by how long repair or replacement should reasonably take, not how long it did take. That makes the timeline evidentiary: permit dates, contractor availability, long-lead equipment and code-required work all need documenting as they happen.
What is the difference between business interruption and extra expense?
Business interruption replaces the earnings you lost. Extra expense pays the additional costs of continuing to operate — temporary premises, expedited materials, overtime. They are separate coverages and extra expense is frequently under-claimed.
Request a claim review
Utah properties: contact us to discuss your claim.Kansas: commercial claims only.Send the basics and we will look at where your claim stands and tell you plainly what we see — including if the honest answer is that you are being treated fairly and do not need to hire anyone. There is no charge for the review and nothing to sign to get it.
Who wrote this, and what we get out of it
Public adjusting work is performed by William J. Addis, individually licensed in 18 states. Like nearly all public adjusters, we are paid a percentage of the claim, agreed in writing before any work begins and subject to any applicable state limits. There is no charge for the review itself. You should weigh that interest when reading anything here.
Free help exists too. Every state’s Department of Insurance assists policyholders with claims at no cost and takes no percentage of your recovery, and will confirm whether anyone contacting you is actually licensed — including us. See where we are licensed, and verify any public adjuster before hiring them.
This is general information, not advice. It is not legal advice, not an interpretation of your policy, and we are not a law firm. You have the right to negotiate your own claim directly with your insurer and the right to consult an attorney; you are not required to hire a public adjuster.
Our role, when we are engaged, is to help policyholders reach a fair and reasonable settlement of a covered loss under the terms of their own policy. Each claim turns on its own facts, policy language and jurisdiction. Kansas readers: under K.S.A. 40-5500 et seq., Kansas public adjusters are limited to first-party commercial property claims and may not represent residential homeowners.