Business Income Insurance: People, Time and Process
Beyond the physical property loss, your YMCA will incur significant additional costs for some time and will not
be as profitable as before. Most YMCAs have business income (BI) insurance to address these risks.
However, getting a proper claim prepared takes significant time and effort on your and Redwoods part. The
tragedy that caused your loss of business income may have taken just a few hours, but the resolution will likely
take months.
Who are all these People anyway?
You will have to deal with what appears to be an army of people that The Redwoods Group has assembled.
During the period when your claim is being analyzed and negotiated, you will need to know who these people
are and what role they play:
1) Claims Adjuster: This is The Redwoods Group employee who is directly responsible for the adjustment of
your loss.
2) Independent Investigator: This is an employee of an investigative firm with which The Redwoods Group
employs to assist it in its investigation of the loss. The words “independent investigator” are important. Only
the Redwoods Claims Adjuster has authority to adjust your loss.
3) Claims Manager: This is the boss of the claims adjuster. This is a Redwoods Group employee.
4) Forensic Accountant: For business income cases, The Redwoods Group will usually retain outside
accountants. Usually, these are highly specialized CPA firms who have experience in forensic accounting
and dealing with Business Income claims. These firms will usually audit your claim and will work with your
accountants or financial staff to understand the financial elements of your claim.
5) Clean-up and/or salvage companies: To help restore operations quickly, if you have not already contacted a
company, The Redwoods Group may recommend a company to clean-up the damaged area quickly and
efficiently. We would suggest your using a national type of restoration company such as Service Master,
Servpro, or Paul Davis.
6) Other technical experts: To evaluate the cause of the loss, pre-existing conditions, and other matters that
may impact the allowable claim, The Redwoods Group may hire engineers, scientists, electricians, and
other specialists to ensure that the claim is within the provisions and restrictions of the policy.
What will the Process entail?
There are two common misconceptions regarding Business Income/Extra Expense claims. First, loss
of income/revenue is automatically covered. Second, that if you had to expend any funds because of
the loss it is covered. The answer is no in both situations. The first requirement is that you must have
a covered cause of loss as defined under the terms of the policy. Secondly, while a lot of the expenses
you might incur are covered, not everything is automatically reimbursed.
1) Communicate Often and Positively: The people in the preceding section have certain common interests
with your YMCA. We want to adjust your loss and return your business to normal as quickly as possible.
This requires us to resolve the insurance claim with as little delay and controversy as possible. We want to
have a positive relationship between The Redwoods Group and the YMCA’s representatives. This will allow
us to get early feedback as to the expectations of both parties, which in turn may save time in preparing the
claim. We both want to keep each other well informed of actions. It is very important that if you have
questions or are not sure of what to do or how to proceed, just ask us.
2) Identify a Leader: This person will act as the single point of contact. Claim preparation and management of
the process should be supported with someone who has the authority to marshal resources within your
YMCA. The leader will need to have broad knowledge of the business. Usually someone from the risk
management or accounting functions, supported by executive management, will take this responsibility.
All requests of your YMCA by The Redwoods Group should be channeled through a single person. We will
not let our accountants or other representatives meet with anyone at your YMCA unless this single YMCA
representative is also present, or is aware of the meeting.
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Business Income Insurance: People, Time and Process
3) Get an Advance: Advance cash allows your YMCA to start its recovery. The Redwoods Group will generally
agree to such advances and we should discuss this as soon as practical.
4) Create a Timetable: The claim preparation will likely involve multiple functions within your YMCA, each of
which requires coordination. Your employees will be busy getting your operations back to normal, so it is
easy to delay claim preparation tasks. If not controlled, these delays will keep your YMCA from getting a
timely settlement, and may even cause you to miss deadlines required by your policy. Having a timetable
will assist you to keep on schedule.
5) Gather Documentation: To obtain a smooth and rapid settlement, you will need to support your claim with
detailed business records. Your claim calculation and documentation will need to be much more than a
computer-generated spreadsheet. Each key variable will need to be supported with contemporaneous
business records and related analysis.
6) Use Multiple Approaches: Claims can be prepared based on (i) specific identification, and (ii) trend,
statistical and other analyses. By looking at your claim from multiple perspectives, your YMCA is more likely
to address all claim amounts, and have a more comprehensive analysis.
7) Use your Accounting System to Capture Extra Costs: Your policy contains coverage for extra expenses that
would not otherwise have been incurred. These costs vary considerably, and are naturally recorded in a
wide range of your regular accounting codes. Simplify the claim preparation process by creating accounts
that are used only for extra costs relating to the loss. Since you will need to show that these costs are
incremental to the disaster, contemporaneously record the reason that the cost was incurred, and why this
was caused by the loss.
8) Maintain a Questions/Issues List: Although we will try to fully explain everything, we don’t always do that
well. We speak “insuranceze” and are more familiar with the process than you. Keep a list of questions and
issues and don’t be afraid to ask your claims adjuster. That person will get you the answer.
9) Prepare a Formal Claim: The claim should be a stand-alone document in an easy-to-understand format.
Part of this process is completing a Partial Proof of Loss or at the conclusion of the claim, a final Proof of
Loss and Satisfaction Agreement.
10) Communicate in Writing – To avoid misunderstandings, we prefer to have both parties provide their
information and document requests in writing. It is a good idea to maintain a written log of everything that
has been provided. We will provide you with our analysis so that your YMCA has time to understand the
differences in approach and/or analysis. This will make meetings to discuss the claim more productive.
11) Wind or Hail Deductible -- the Wind or Hail Deductible that may be applicable to your Building and Contents
loss does not apply to the Business Income/Extra Expense portion of your claim.
12) Co-insurance: Your policy may contain co-insurance provisions that will apply to your loss.
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