The recent wildfires in Southern California have caused devastating losses to homes and businesses, which has left many to navigate not only the rebuilding process but also the financial recovery needed to resume operations. One of the most critical tools for financial recovery is business interruption insurance, which can help businesses regain lost profits, cover ongoing expenses and provide support for additional costs incurred due to the disruption. Understanding how to maximize this coverage can make a significant difference in the speed and success of recovery.

UNDERSTANDING BUSINESS INTERRUPTION INSURANCE

For businesses with business interruption coverage, insurance may help cover:

  • Temporary space if operations cannot continue at the current location
  • Extra expenses necessary to keep the business running after the fire
  • Employee wages and payroll
  • Loan payments due while operations are halted
  • Other specific expenses based on policy terms

IMMEDIATE STEPS FOR BUSINESSES IMPACTED BY WILDFIRES

If your business has been affected by the fires, taking immediate and strategic action can help ensure a smoother claims process and a faster recovery. Some key steps to consider include:

  1. Review Your Insurance Coverage
    • Carefully examine policy details and determine the extent of coverage
    • If there are questions, consult with an insurance broker or legal counsel
  2. Understand Policy Limits
    • Identify what is covered and any financial limits on business interruption claims
  3. Assemble a Dedicated Claims Team
    • Internally, include individuals familiar with operations and finance
    • Externally, involve an insurance broker, legal counsel, and, if necessary, forensic accountants to assist in preparing the claim
  4. Notify Your Insurance Carrier Immediately
    • Early notification is essential to initiate the claims process
  5. Engage with the Insurance Adjuster Proactively
    • Schedule a meeting as soon as possible
    • Be responsive to information requests to prevent delays
    • Maintain open communication regarding major business decisions that could affect the claim
  6. Take Ownership of the Claims Process
    • Develop a claims strategy with a clear focus on the desired outcome
    • Be proactive rather than waiting for the insurance company to drive the process
  7. Document Everything
    • Take photos of all physical damage
    • Create a detailed inventory of damaged items
    • Gather key financial records from the past five years, including:
      • Profit and loss statements
      • Balance sheets
      • General ledger reports
      • Payroll records
      • Tax returns
      • Lease agreements and contracts
    • Track all revenue and expenses incurred post-fire to support the claim
  8. Chronicle Events While They Are Fresh
    • Prepare a written timeline of the disaster and response efforts
    • Document all mitigation steps taken to reduce losses

GETTING SUPPORT IN NAVIGATING THE PROCESS

Filing a business interruption claim can be complex, especially when dealing with the broader challenges of wildfire recovery. Forensic accountants can help assess losses, compile financial documentation and ensure claims are structured effectively. In many cases, their fees may be covered by insurance.

If you need guidance through this process, GHJ’s Forensics Services Practice is available for consultation. Our expertise in business interruption claims can help streamline documentation and maximize recovery. For more information, reach out for a consultation.