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Interplay Between Business Interruption, Extra Expense, and Property Damage

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The course “Interplay Between Business Interruption, Extra Expense, and Property Damage” is designed to enhance the student’s knowledge, understanding, and professional competence in the legal and claims handling aspects of business interruption claims. The module is presented by Greg Barnhill, Executive General Adjuster for Crawford Global Technical Services, and Chris Dailey, CPA, with HSNO The Forensics Firm.

The presenters begin by providing an overview of business interruption losses and defining the components of the earnings loss. Next, the presenters provide the three methods for calculating the earnings loss and explain whether any of the three methods is better for certain situations. The presenters then define Extra Expenses and give numerous examples of the concept. Following this, the presenters speak at length of the interplay between coverages and common scenarios where “double dipping” can occur if the adjuster is not careful. Similarly, they describe several areas where expense duplication should be avoided, and they give tips on mitigating the loss. Finally, the presenters cover some special cases relating to business interruption topics and describe how each is best handled.

After completing the course, the viewer should be able to…

describe business interruption losses and list the elements of such losses; define the period of restoration; determine when business interruption coverage is triggered; list the components of the earnings loss; calculate the earnings loss using one of three accounting methods described in the presentation; identify documentation that helps establish loss amounts; define Extra Expenses; distinguish between mitigating and non-mitigating Extra Expenses; select among various options to help an insured mitigate a business interruption loss; avoid double-dipping to the extent possible; identify common areas of payment duplication; and effectively work with an insured in minimizing the period of restoration.

The course is designed for practitioners and insurance professionals working in the area of property insurance claims handling.

What CE Credit is available?

Note: To qualify for credit, you must submit completion (including a passed final exam if required) within five days of completing the last quiz. No partial credits will be awarded.

State:
Adjuster General CE Hours:
Adjuster Ethics CE Hours:
Attorney General CLE Hours:
State's Course ID:
NH 2.0 482657
TX (classroom equivalent) 2.0 137732
NC 2.0 201872
FL * ( Provider Number: 364169 ) 3.0 1174844
IL 2.0 585457
WY 2.0 26494
OK 2.0 1025059

* This course has been approved by the Florida Department of Financial Services for insurance continuing education credit.

Course Content

Components of the Earnings Loss
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Lesson Content

1) Introduction

2) Learning Objectives

3) Business Interruption Losses

a) Goals of the adjuster

b) Definition and elements

4) The Chain Rule

5) Business Interruption Loss Determination

6) Components of the Earnings Loss

a) Proper period of indemnity

i) Dealing with delays by the insured

b) Projection of loss period sales

i) Dealing with changes in the economy

c) Expenses that continue/discontinue during the loss period

i) Dealing with improvements to a plant

Methods of Calculating the Earnings Loss
Expand
Lesson Content

1) 3 methods of calculation

a) Top down (gross earnings) approach

b) Net income plus continuing expenses approach

c) Three column approach

2) The selection of which method to use

3) Examples of the 3 methods

a) Top down (gross earnings) example

b) Net income plus continuing expenses example

c) Three column example

4) Business Interruption triggers

5) Documentation to establish the loss amounts

6) Business income worksheet

Extra Expenses
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Lesson Content

1) Extra expenses defined

2) Keeping a separate ledger account

3) Mitigating vs. Non-mitigating

a) Mitigating extra expenses

b) Non-mitigating extra expenses

4) Communicating with the insured

5) Interplay between coverages

a) Double dipping

6) Reducing the loss

a) Teamwork with the insured

Interplay Between Coverages
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Lesson Content

1) Inventory fire sales

2) Inventory coverage at selling price

a) Seasonal variation in price

3) Clean up labor

4) Property damage recorded on the income statements

5) Temporary locations

6) Rebuilding with improvements

a) Delaying the period of restoration

b) Improvements to plant

7) Sample problem – double dipping

8) Sample problem – mitigating

a) Insured spending but not mitigating?

Mitigating the Loss and Avoiding Expense Duplication
Expand
Lesson Content

1) Temporary locations or relocations

a) Case study

2) Common areas of duplication

a) Payroll

b) Selling price endorsement

c) Fire sale of damaged goods

d) Landlord/tenant paid rent

e) Profit on repairs

f) Fixed overhead costs

i) Public adjuster / “Gifted time”

Special Cases
Expand
Lesson Content

1) Fire sale case study

2) Insured unsure whether spending will mitigate

a) “Monday morning quarterbacking”

3) Damage solely to finished goods

4) Windfall profit from goods covered at selling price

5) Insured delays plant repair after loss

6) Waiting period deductible

Get CE Credit or Certificate of Completion.

Submit within 5 days to get CE Credit or Certificate of Completion.

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