As Hurricane Harvey and Hurricane Irma have stormed through Texas and the Southeast, the aftermath may have left you with considerable physical damage to your facility. Even if your business was spared from significant impact, you may have been affected due to power outages, road closures or mandatory evacuations. Below are a few best practices to consider as you think through how to prepare for a smoother insurance claim adjustment process.
2. For Property Damage:
- Appoint a person to serve as the primary point of contact regarding the property damage claim.
- Establish a general ledger loss receivable account for all direct expenses related to the loss (materials, supplies, vendors, contractors, etc.).
- For expenses charged to this loss receivable account – maintain a supporting documentation file with invoices, PO’s & receipts. Review vendor invoices for complete descriptions of purchases and/or work performed, dates, etc.
- Prepare a tracking mechanism (examples include excel spreadsheet or manual sign-in log) for any internal labor associated with loss cleanup, debris removal or any other loss related activity. Include name, date, hours, rates & description of activities. Idle employees should not be included and it is not necessary to remove these labor amounts from your normal income statement accounts.
- Document with pictures and videos when possible.
- If there is inventory/stock damage - maintain the following:
i. Perpetual inventories as of the date of loss
ii. Post loss quantity counts
iii. Cost and/or selling price of lost items
iv. Damaged inventory – preserve until insurance company can inspect and approve of discarding. If you discard prior to inspection by your insurance company, take plenty of pictures.
- For business personal property (Furniture, Fixtures & Equipment) damaged – prepare a detailed listing of all items (description, location, asset tracking number), condition (destroyed, damaged, needs cleaning, etc.), replacement cost and any other relevant information as soon as possible. Take pictures of items.
3. For Business Interruption:
- Appoint a person to serve as the primary point of contact regarding the business interruption claim.
- Begin tracking the status of all reservations, cancelled reservations, and/or planned events.
- Retain all forecasts, outlooks, budgets and market statistics that were prepared prior to the loss.
- Should a significant shutdown and claim occur, the initial information needed will be:
i. Historical/pre-loss and post-loss sales/revenues (monthly and daily).
ii. Historical/pre-loss and post-loss profit and loss statements.
iii. Historical/pre-loss and post-loss payroll summary reports by pay period.
Should you have any questions or like to discuss this further, please contact Cory Bennett or Michael Dukes with Bennett Thrasher LLP.