Case Study: Business Interruption Insurance Claim

The Project

The COVID-19 pandemic has brought seismic changes to the retail space; some businesses struggled mightily while others saw an increase in demand. Home furnishing stores saw large increases in business as consumers began spending more money on home improvements rather than vacations, dining, or events.

When a privately owned high-end furniture store experienced an insurance loss while they were on track to double their annual growth, they approached MNP to help quantify the losses. How do you factor in such growth when making a claim?

The challenge

Insurance companies can be conservative institutions. Seeing a period of growth that’s out of the ordinary, they may treat it as an outlier rather than a predictor of future success.

Our client was experiencing nearly 100 percent year-over-year growth figures when they had an insurance event. The insurance company, being conservative as it is, didn’t believe the upward trend would continue.

The Solution

After taking care of the immediate need for repairs, the furniture company turned its attention towards calculating its losses due to the business interruption. Insurance companies consider several factors including how long the interruption was, how much revenue was lost (and what expenses were reduced) by pausing operations, and how much the company could have earned had the event not occurred.

Our team presented figures to the insurer that were aggressive but evidence-based, which showed that this interruption during a time of such strong growth should result in a large loss amount. We were able to lay out multiple different scenarios showing how the historical results confirmed our initial trending analysis, even though it appeared aggressive to the insurer.

The Outcome

By showing the results of what occurred after repairs, along with the trending leading into the loss period, we were able to show the insurance company proof our aggressive figures were accurate. They offered a settlement figure over 60 percent higher than their first offer.

Businesses aren’t cookie cutter. Neither is their insurance coverage. MNP’s Insurance Advisory team provides thorough analysis, insightful reporting and credible testimony which will help you resolve claims with confidence. We also work with you to ensure you have the appropriate coverage and your insurer treats you fairly.