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Most of these claims are negotiated. Remember what would have happened in terms of the business operation had the loss not occurred. So you are relying on theoretical projections and calculations based in large part on the history of the business with projections for sales trends taken into consideration. This is why you should have your own claim prepared based on the facts of your business, the coverage you purchased, and what you feel your losses are. Policyholders attempting to do this on their own are at a great disadvantage given their lack of knowledge of the practice and procedures of documenting, presenting, and negotiating business interruption claims. Remember the insurance companies have an army of outside experts that do this type of work for them on a daily basis.
Not likely as a flood loss is not covered under a standard property policy and the National Flood Insurance Program does not provide Business Interruption coverage for a flood loss. There are companies that may sell flood insurance but it is in the private market not through the Federal Flood Program.
Probably not. As you can probably imagine, there has been a great deal of litigation surrounding B.I. coverage and claims given hurricane activity over the past 5 years. Some of the case law in Florida says your prospective business plans cannot be speculative. In other words you would have had to have detailed plans for the new venture to make a claim. Bank loans lined up, a detailed pro- forma, signed leases or a contract signed with building construction started are examples of what may be necessary to get you beyond the speculative bar that has been established.
This is a situation that comes up quite often. The answer and success of your claim may be different depending on how courts have ruled on this issue in the various States where the loss occurred. We have seen cases that go both ways. I am not surprised an insurance company would take the position that there is no B.I. to the motel operation since it had no physical damages. Even though the cause was a covered peril and both buildings were listed on the policy. Loss of market to the motel due to the fire at the restaurant will probably be the basis for the insurance company’s denial.
Our experience is that business interruption claims are generally the last part of a claim to be settled just by the nature and complexity of these losses. Most insurance adjusters for the insurance company will get instructions to hire outside forensic accountants whose practice is representing insurance companies on B.I. claims. You can be expected to be presented with a document request from these folks for all your financial records, tax returns, profit and loss statements as well as any reports required to be filed to State Departments for sales tax, etc. As there is a great deal of subjectivity in the means and methods of preparing a business interruption claim, you should not rely on the insurance company’s outside experts but get your own claim prepared and evaluated fairly. Business interruption is far too complex not to have someone on your side.