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October 26, 2017

5 Tips for Filing a Post-Disaster Claim

Summary:

Following a catastrophe, resources are often stretched thin. It is important to create milestones and hold everyone accountable.

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When disaster strikes, organizations can face significant losses—not only from damage to physical property but also from the business interruption caused by the event. Here are five key tips to keep in mind when filing an insurance claim after a disaster:

Disaster Response Checklist:

1. Communicate with employees and external stakeholders. Following the activation of an emergency preparedness program, it is critical to communicate with employees and business partners about their well-being, as everyone will be dealing with potentially significant, or even devastating, personal and professional issues.

2. Review your insurance policy. Even if a business does not suffer physical damage, it may have coverage for business interruption losses. For example, if a business’s customers or suppliers have been flooded and cannot receive the business’ goods or services, the insurance policy may include what is referred to as “Contingent Time Element coverage.” Non-physical damage coverage for business interruption losses can also include lack of access to facilities (road closures), government declarations of emergency, cancellation of events or loss of utilities, among others.

See also: 6 Reasons We Aren’t Prepared for Disasters  

3. Maintain contemporaneous documentation. To say that the hours and days after a disaster are hectic is an understatement. This is a trying time for businesses as they try to rebuild and recover. However, keeping careful records even during this time of disruption is critical. Email traffic around current market conditions, cancellations of sales or suppliers/customers being affected is critical to preserve as it is extremely valuable to a business interruption claim.

4. Get the right team on your side. A major property claim can take several months to resolve, and the complexity of the issues that may arise requires external experts to look out for a business’s interests while management focuses on what is important—rebuilding and recovering. Additionally, the fees paid surrounding disaster recovery services are often reimbursable by the insurance carrier, resulting in no out-of-pocket costs to the affected business.

5. Establish milestones for claim recovery. Following a catastrophe, resources are often stretched thin. It is important to create milestones and hold all members — from the adjusting team to internal stakeholders — accountable for achieving those goals.

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About the Author

Clark Schweers, principal and leader of BDO’s forensic insurance and recovery practice, has significant experience advising organizations on the quantification and compilation of complex insurance claims for insured businesses.

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