Raiders of the Lost Profits – Part Three: Search for the Grail

He chose poorly…
Covered Cause of Loss vs. Actual Cause of Loss
Or better yet, Covered Cause of Loss vs. Actual Cause of Loss vs. Perceived Cause of Loss.  This is what our adjuster must help us decipher.  The ‘covered’ causes of loss possible for business interruption/loss of income can range from slightly different to radically different than for your property assignment. That said, the business interruption/loss of income coverage is not necessarily actuated by the ‘covered’ cause of loss.  So…documenting both the covered and actual cause of loss is essential during the property adjuster’s inspection:
  • Take photos of ALL the physical damage – including that which is ‘not’ damaged and that which is ‘not’ covered property 
    • Business Interruption coverage can be actuated by a ‘covered’ cause of loss to the business space even if the structure itself is not covered under the insured’s policy
    • Conversely, if only BPP was damaged and there was no damage to the business space, coverage may be actuated only to the extent that of physical damage to BPP from a covered cause
  • Get the contact information for the landlord, and/or a lease
  • Note the use of the structure
  • Note any power outage, whether it is on or off-premises and inquire if the cause of the outage is known at the time of inspection – get the name of the insured’s power supplier
  • Note damage in the area.  Is damage widespread or confined to the insured’s specific area?  Was there a mandatory evacuation order in force during the interruption in business operation.  If so, inquire if a copy of the order is available
  • Note the existence of any multiple entities
  • For losses involving commercial or habitation rental properties, note units vacant at the time of the loss as well as any relocation activity for the tenants and make sure the unit designations reported as damaged match the insured’s unit reference
Observation and documentation of the business activity at the time of your inspection and inquiry about the activity between the loss date and your inspection will go a long way in making the Business Interruption process easier for us at the Business Interruption office, as well as easier for our client and for the insured.


Raiders of the Lost Profit series:
Part Three: Search for the Grail:Covered Cause of Loss vs. Actual Cause of Loss
Part Four: Pit of Snakes:  Establishing Period of Restoration
Part Five: Reporting to HQ:  Here’s What We Know So Far

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