Business Interruption - Timeline of a Claim

When a business suffers a loss, any associated downtime can cost a company more than the actual value of the contents lost and/or the structural damage. A recent study revealed that the average large business interruption property insurance claim is on the rise. In fact, it is now more than US$2.4 million—36% higher than the corresponding average property damage. The extent to which a loss disrupts operations, however, depends on some factors, including the claims process. Swift resolution can save time and money for both the insurer and the insured.

At SPECS, we often talk with clients about our performance standards. While the processes for both commercial and residential losses are similar, milestones may differ. Business claims are typically more complex so that timing can be dependent upon many variables. Nonetheless, we consistently exceed performance standards we’ve created for ourselves, as well as those influenced by our customers.

It is one thing to tell a client about our service commitment—and a whole other thing when they experience it firsthand. A recent claim involving a fire at a large gelato company in Calgary, Alberta, offers a glimpse at the impact efficient evaluation and project management processes can have on business.

Below is the actual timeline of our involvement with this claim, from the date of loss through to settlement:

December 19, 2015

  • Fire breaks out at an Alberta-based gelato company
  • Retail operation destroyed; extensive water and soot damage to production facility/offices
  • Original emergency contractor time estimate for restoration: four months
  • Original emergency contractor cost estimate for restoration: three million dollars
  • Constraints: estimated time/costs not in line with business needs: minimal cash flow for repairs; limited stored product; Canadian Food Inspection Agency approval needed to reopen; technical nature of production machinery; temperature sensitivity of stored product

December 24, 2015

  • Insurer contacts SPECS to help fast claims process/repairs
  • Attend site and inspect damage to prepare emergency scope of work
  • Meet with insured to discuss preference to engage contractor who had completed recent café renovations
  • Facilitate insured’s wish to use own staff to help with cleanup

December 28, 2015

  • Attend site to take details of loss
  • Prepare emergency scope of work and send for bids, including to owner’s preferred contractor
  • Start bid documents for permanent repairs

December 29, 2015

  • Begin replacement cost appraisal of damaged goods
  • Recommend refinishing instead of replacing certain items to save claim dollars
  • Propose a substantial preliminary advance to meet ongoing costs

December 30, 2015

  • Receive emergency repair bids
  • Recommend use of owner’s contractor who provided the lowest bid
  • Receive permission from insurer to agree upon price with contractor
  • Continue repair scope to send to contractor for appraisal preparation

January 7, 2015

  • Production facility ready

January 12, 2015

  • Agreement on final scope and price finalized
  • Further, large advance based on agreed upon repair price, including equipment and contents loss

SPECS worked through the holidays. Only 11 working days after being engaged, with recommended pricing considerably lower than the estimate from the initial emergency contractor.

Not only did we meet our performance standards; we exceeded them.

Most importantly, the gelato company was back in production faster than originally thought possible, minimizing disruption and keeping their business…in business.

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