Business interruption insurance claim accounting

A business interruption engagement produces a policy-period loss calculation reconciled to pre-event financial statements, a continuing-and-saved-expense schedule separating what kept running from what stopped, a summary exhibit organized the way an adjuster reviews a claim, and a full source-document index behind every figure. Where the claim involves more than one location or revenue stream, we build the calculation by location or stream and roll it into a single summary so the adjuster can see both the total and the underlying detail. Revisions as the claim moves through review, a request for more expense detail, a dispute over the indemnity period, a supplemental proof of loss, are turned around against the claim's own timeline.

We start by reading the policy itself, the coverage form, the period of restoration or indemnity period, and any sub-limits, before touching the financials, since those terms set the exact boundaries the calculation has to respect. Pre-event financial statements are reconciled to bank and tax records to establish a reliable baseline, adjusted for any documented factor that would have changed revenue regardless of the covered event. The loss is then calculated against the policy period specifically, not a rounder date range, and continuing versus saved expenses are classified line by line rather than estimated in bulk. A senior reviewer reviews the full package before it goes to the adjuster, checking the loss figure, the expense classification, and the reconciliation to pre-event statements for internal consistency.

Business owners filing a first-party business interruption claim after a covered event, their brokers, and any public adjuster or attorney representing the policyholder in the claim process. We routinely work alongside a policyholder's own broker or counsel rather than in place of them, since negotiating the settlement, applying the policy's legal interpretation, and pushing back on an adjuster's position are their role, not ours. We also work with businesses whose pre-event books need cleanup before a loss calculation can even start, which is common enough that we build the time for it into the engagement from the outset rather than treating it as a surprise.

The same handful of issues account for most of the friction in a business interruption claim. Pre-event books that were never reconciled leave no reliable baseline to measure the loss against, so the reconstruction has to happen before the calculation can start. The indemnity period gets miscounted at either end more often than businesses expect, a day or a week either way changes the whole figure. Seasonal revenue swings get mistaken for interruption-related loss when the baseline is built off an annual average instead of the matching prior-year period. Continuing and saved expenses get lumped together or missed entirely, understating what the policy would otherwise cover. And a claim submitted without a documented basis for every adjustment invites exactly the kind of adjuster pushback that slows a settlement down.

The pre-event bookkeeping usually lives in QuickBooks Online, Xero, or NetSuite, and we work from that system directly to build the reconciliation rather than asking for data in a different format. The loss calculation, the continuing-and-saved-expense schedule, and the baseline comparisons are built in Microsoft Excel, formula-driven so an adjuster or their own forensic accountant can trace every figure back to its source. Where the claim spans multiple locations or a large transaction population, we use CaseWare IDEA to summarize and test the underlying data before it feeds the schedule. Finished exhibits go out as PDF summaries cross-referenced to the underlying Excel workpapers and the source documents behind them.

Business interruption claims are scoped and quoted individually rather than priced off a flat monthly tier, since the size of the loss, the number of locations, and the state of the pre-event books all change how much work the claim actually needs. Our US rate card covers recurring bookkeeping and advisory work; a claim engagement is quoted the way our Scale tier is quoted, after a scoping call covering the policy, the event, and the records available, so you have a number in writing before work starts.

Most business interruption coverage runs on one of two mechanics, and the choice changes what the calculation has to prove. Under an actual-loss-sustained basis, the claim measures the net income the business would have earned during the interruption, minus expenses that did not continue, which is the calculation most of this page describes. Under an extra-expense basis, the claim instead measures the additional cost the business incurred to keep operating in some reduced or alternate form, moving to a temporary location, renting substitute equipment, paying overtime to catch up, up to whatever sub-limit the policy states. Some policies blend both, covering lost income up to a point and extra expense on top of it, and the coverage form has to be read closely before either calculation starts, since building the wrong one wastes the time it takes to redo it correctly.