The Length of the Road Back from Disaster: Four Rules for Measuring the Business Interruption Period
The Length of the Road Back From Disaster: Four Rules For Measuring the Business Interruption Period
By Gary Thompson
Commercial property insurance policies commonly cover business interruption (“BI”) losses during the period of time that a business is interrupted by a covered peril such as a hurricane or earthquake. The typical BI coverage within that period is for the “actual loss sustained” by the policyholder, usually further defined as the net profits that would have been earned plus any continuing expenses such as rent (or alternatively, gross revenues minus discontinued expenses). Apart from calculating the BI loss itself (the province of forensic accountants), adjusting the length of the “BI period” (or “period of recovery”) is a common point of disagreement between insurer and policyholder. How longshould the insurer pay such a BI loss?