Business Damage Claim

What is a Business Damage Claim?

Civil unrest can result in property damage, vandalism and stolen or damaged goods. As business owners work to protect or repair their buildings, property insurance may cover costs associated with protection and preservation of property, business interruption and property damage. This is where filing a business damage claim or business interruption claim may help cover your costs.

Protection and Preservation of Property: What It Means For Your Business Damage Claim

Policies may include language that allows for reimbursement for reasonable and necessary costs for actions to temporarily protect or preserve the covered property. Generally, these actions will be evaluated by the insurance company to see if they are reasonable and necessary and in response to actual or imminent physical loss or damage from a covered cause of loss.

This may include the cost of supplies and labor to board up windows and doors or make other adjustments to the property to temporarily protect or preserve it.

Not all forms include coverage for protection and preservation of property. Manuscript policies are more likely to include these provisions than most standard package policies. We suggest reviewing your policy with your broker to evaluate the extent of potential coverage. 

Should You File a Business Damage Claim or a Business Interruption Claim?

Even if your business does not suffer direct physical loss or damage, a protection and preservation of property clause may provide business interruption coverage losses incurred due to reasonable action being taken to temporarily protect and preserve the insured property. Frequently, this coverage is separate from the property damage expenses incurred to temporarily protect or preserve the insured property.

 The policy may also respond to business interruption losses suffered due to an order of civil authority that prohibits access to a business and impairs operations. Frequently, the order must be the direct result of physical damage, of the type insured, which occurred at your location or within a stipulated distance from your location.

Generally, property policies consider all loss or damage from the same “occurrence” within the scope of one claim, regardless of the number of locations involved. As such, there is one limit available, but only one deductible applied. We suggest carefully reviewing your policy to determine how an “occurrence” is defined.

Other policies provide a specific time window that defines the occurrence, for example, 72 hours. If riots or damage occurs in waves over multiple days, there may be multiple occurrences. Depending on the policy language, an insured may be able to select when the 72 hour time period begins. We recommend a close review of your policy, as some deductibles apply on a “per location” basis, where a deductible is applied at each location involved rather than all properties involved in the “occurrence.”

 The facts of each individual loss and policy wording will determine the ultimate outcome.