How to Calculate a Business Interruption Claim

This is how a business interruption claim is worked out in BIClaimPro, step by step. It is written for public adjusters, forensic accountants, insurance brokers, law firms and business owners.

The five steps

1. Select Your Industry Choose from 8 industries and 31 subcategories. The Expenses tab pre-fills common expense rows for your business type, and each subcategory shows an indicative gross profit margin that is never used in your claim.
2. Enter Revenue Data Enter your sales for the months before the loss (a monthly claim needs at least 3 months, and the tool suggests how many more from the length of your loss) and your actual sales during the loss. Upload a CSV or Excel file, or paste it in.
3. Classify Expenses Enter your P&L on Claim Setup, with variable costs and fixed costs. On the Expenses tab, mark each fixed cost and extra expense as Insured or Not insured and enter what you paid. Add your own rows.
4. Set Scenario Parameters Set the recovery ramp-up period, the Conservative and Insurer View percentages and the contingency buffer. The industry benchmark is indicative only and is never used in the claim.
5. Review & Download Review the result on the Summary tab, then download the PDF report and the Excel workbook.

Lost profit calculation

A business interruption claim is a lost profit calculation. The tool starts with the sales the business would probably have made if the loss had not happened, takes away the sales it actually made, and then adjusts for the costs that stopped and the costs that carried on. Every figure is an estimate, and the working is shown.

What is but-for revenue?

But-for revenue is the sales the business would have made but for the loss. The tool projects it from your sales history with the method you choose, such as a trend, year on year growth, a daily average or a seasonal pattern, and it shows which method it used.

Period of indemnity and waiting period

The period of indemnity is how long your policy pays for after the loss starts. The waiting period is a period at the start of the loss that your policy does not pay for. You enter both from your policy, and the report shows how each one changes the estimate.

Who uses these steps?

Public adjusters use them for a first pass before the forensic accountant is engaged. Forensic accountants use them to save data entry time on smaller claims. Insurance brokers and law firms use the same structured working in discussions and disputes. Business owners use it to understand the claim before the first meeting.