Calculating Damages for Business Interruption Losses: Coverage Maximizing Methodologies, Post-Loss Market Conditions

This CLE course will discuss the challenges that COVID-19 and other catastrophes present when calculating business interruption claims. The panel will discuss the two most commonly adopted methodologies, how the court's approach can affect recovery, and the effect of recent decisions and pending issues on this area of law.

Business interruption insurance is proving to be a lifeline for some businesses which may need to recover on pending claims to survive. A policyholder's likelihood of recovery depends on understanding the "business interruption (BI) formula" of insurance.

But calculating losses are usually far more complex since policyholders must estimate their losses, assuming that the loss event did not occur. This requires working with projections and assumptions. Documentation may be difficult to obtain if devastation is complete.

When a widespread event impacts an entire economy or area, there are sometimes disputes over whether to consider post-loss market/economic conditions in calculating the insured's business interruption losses. Courts grapple with whether business spikes in the immediate aftermath of a disaster should be considered. Start-up businesses may face unique difficulties.

Further, courts may be inclined to favor finding coverage or not, depending on the type of disaster, nature of the business, and policy language at issue.

Listen as this experienced panel guides counsel regarding calculating business interruption claims, when to involve accounting experts, what types of challenges to expect, and how a court's approach can significantly affect recovery.