Editor’s Note: This article has been contributed by Robbye Mohn, a forensic accountant and partner at RGL Forensics.
Call it global warming. Call it climate change. Call it what you will, but changes in weather patterns are creating catastrophic events more frequently in locations unaccustomed to facing these kinds of issues.
Looking at both the facts and the context of the business that has been interrupted, forensic accountants will establish a defensible and accurate calculation of the financial impact for the adjuster and the insured.
Easing the Process
3. Prepare your insured with the big picture.
There are some basic items an insured will likely need to provide for an effective claim review by a forensic accountant, including:
A variety store/gift shop in New York files a business interruption claim. If this claim is considered as a general retail store, the assumption would be to look at the financial records mentioned above, as well as the previous few months to calculate the loss. However, the engaged forensic accountants dug deeper and asked additional questions about the nature of the business. The shop sells/rents Halloween costumes, making the bulk of its annual revenue during the month of October, specifically leading up to the 31st.
If the insured were a manufacturer with warehouse operations on the Hudson River, then the BI claim would have a different level of complexity. Power outages, flooding compounded by snow and freezing temperatures in the days after Superstorm Sandy hit, and gas shortages impeded the owner’s ability to get to the warehouse. Once the waters subsided, the owner was finally able to get to the warehouse and survey the damages. However, clean-up was slowed by prolonged power outages and additional inventory was lost.