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Prepare for insurance claims due to COVID-19 disruptions

Start the record keeping necessary to support claims

RFP
Woman writing notesTax relief, the disbursement of checks to the American public and other governmental steps related to COVID-19 may not require business or personal documentation supporting the virus’ impacts. Yet the environment will be very different when it comes to complex commercial disputes over unfulfilled contracts and claims for covered losses on insurance policies.

The following four actions will help your business as you negotiate with partners and insurers over losses related to COVID-19 economic disruptions.

  1. Prepare for the possibility that coverage may be available. Traditional business interruption coverage typically applies to events that cause physical damage to a location. The possibility exists that a trier of fact in arbitration, state or federal court will rule that COVID-19 caused the interruption in a way similar to a hurricane or flood. Be prepared in the event coverage exists and is enforceable.
  2. Assign a trusted professional to collect data on the pandemic’s financial impact. An individual with a solid understanding of your business and its obligations will be ideal to collect and account for operational challenges, financial risks and other impacts to your business.
  3. Begin the process of documenting the loss related to COVID-19. You can document a loss when a transaction occurs and flag specific expenses during your monthly close. Discuss with your financial and accounting teams a plan to track and account for increases and decreases in your expenses. Implement the process and review its execution to ensure you identify all transactions. Determine when revenue began to fall off and the reasons. Support your assertions now rather than six to nine months from now, when records might be needed.
  4. Determine what insurance coverage you have and how it applies. You may have business interruption coverage under your company’s commercial property insurance policy. Other policies that may be applicable to COVID-19 include nondamage business interruption policies, parametric products and supply chain insurance. Consult your broker and insurance professionals to determine exactly what you have and what applies.

Thoughtful planning and intentional execution of a focused strategy are essential to curb losses resulting from the COVID-19 pandemic. Take steps now to improve your opportunities to recover and grow in the future.

Contacts
Frederick J. Kohm
Partner, Strategic Solutions
T +1 484 868 8588

Gene Cahill
Partner, Strategic Solutions
T +1 312 602 8103

Zach Snickles
Partner, Strategic Solutions
T +1 602 474 3474