Check your COVID-19 Insurance claim

empty table and chairs on a sandy beach

If your business has been closed due to the COVID-19 crisis, you may have been able to claim for some loss of income on your business insurance policy, although this does vary case by case depending on your insurer, policy details and the claim itself.

Forward Financials writes:

Insurance companies have been inundated with requests as understandably businesses need the cash as soon as possible.  Despite this rush for cash, it is wise to double check your supporting data and also the resulting claim calculation.

Having never seen a business crisis of this scale before, many insurance companies are under huge pressure right now to process claims.  Income has clearly been lost by businesses and there needs to be a fair calculation to deal with this.  This is normally based on historic averages.  However, the loss of income is mitigated as operating costs have also been reduced either by the business directly or through government reliefs and schemes such as empty business rates relief and the Coronavirus Job Retention Scheme.  This may be complicated further as some businesses ordinarily relied/part-relied on government funding which now needs to be offset.

As claims are based on adjusted historic financial data, businesses need to ensure they have accurate pre-crisis Management Accounts as these will be the foundation of loss calculations.  These should be in enough detail to isolate the cost categories that have been impacted.

In terms of the claim itself, calculations can become quite complex and insurance adjusters may therefore need to use a bespoke approach to calculate each loss.  Excel spreadsheets therefore become the go-to tool.  Excel is a hugely powerful and flexible tool, but it does need output checks so credibility can be assured.  Unlike integrated financial models, where balancing, matching and input/output checks can easily be embedded, checks are more difficult on spreadsheets when manual inputs are derived from other unlinked sources.  As a result, errors may unfortunately occur.

Remember once you have accepted an insurance payout you will not be able to revisit it.  It is therefore worth taking the time now to ensure you provide accurate information and that loss calculations are correct.  You can then benefit and move forward.

Let us know if we can help and we wish all those that find themselves in this very difficult situation the very best.

Our contact details are:
07780 336952 Delphine Paterson FCCA ACIB
07780 336956 Raemy Singh FCA

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