skip to content

Steps to manage loss and business interruption during COVID-19


During an extenuating circumstance, normal course of business gets interrupted and the resulting losses can be significant. The novel coronavirus (COVID-19) has become a global pandemic. Business closures, travel restrictions, and other precautionary measures can negatively affect your bottom line.

In the event of such a business interruption, we've listed some starting points for consideration that can help your business better manage the process.

Understand where you stand with your insurance policy

Get in touch with your insurance broker and read over your policy. Make sure you understand the key elements of your insurance coverage that get triggered as a result of the COVID-19 pandemic. Pay close attention to the limits available in your policy. If you're uncertain of the ramifications to your business, get in touch with your advisor to review your policy together.

Moreover, work with your broker so the insurance company can assign a claims adjuster for this particular case. This will be either internal or external/independent.

women on phone and computer

Assemble a recovery team

Put together a recovery/claim team to determine the plan of action. This team should include:

Appoint an individual as your company's primary point of contact with the insurance broker and other relevant parties involved. This person manages the insurance risk.

This individual will act as an account executive and claims advocate.

These individuals should specifically specialize in claims preparation and forensic accounting.

They need to understand impact on operations and address business issues.

They will assist in managing damage or recovery of inventory or other assets.

They will manage payroll and staffing issues, sick leave policies, and keeping everyone calm during uncertain times.

They will help manage the media if your company becomes directly affected.

They will manage the records of all costs and expenditures related to the loss/recovery efforts.

Important: Depending on the size of loss, check with your accountant to see if they offer claim preparation. In most cases, the professional fees are covered by the insurance policy, and this outsourced service will relieve significant pressure on your internal finance team. It also ensures the claims are prepared properly with the right documentation, and presents the best chance of recovery.

Establish a general ledger account

Have a specific general ledger (GL) account to accumulate all loss-related charges including materials, supplies, vendors, contractors, and other items. These GL accounts are kept separate from normal operating expenses so all abnormal expenditures are both trackable and traceable for the claim. Without a GL account, it is far more difficult to track your incremental costs.

Maintain records and document your step-by-step process

Keep written records of all communication with the insurance adjuster and the vendors engaged by them. It's very important to track every step in the process. Make sure all expenses incurred as result of COVID-19 are explainable, tracked, and supported. Simple summaries and GL account details aren't enough to warrant reimbursements from the insurance company. You will need receipts, invoices, and full documentation.

In order to understand and start measuring the insurable losses, gather all financial records and have them ready and available so that historical and forecasted results of your business can be reviewed.

Establish a mitigation plan

Set up a comprehensive plan that could include:

  • outsourcing from alternative locations
  • setting up a temporary location, or coordinating with staff remotely
  • reviewing internally available capabilities and capacities for continuation of business activities

In case of a challenge, it's best to record why you don't choose certain mitigation strategies, as well as the reasoning for the ones you do choose. This way, you can use it as a reference point for future contingency planning.

Set consistent claims team meetings

Set up a protocol to ensure consistent and timely meetings are held with the recovery/claims team where you discuss the claims process, flow of information, payment plans, deadlines, etc. Developments with such a pandemic change day-to-day, so staying on the same page with each other is key. If at all possible, these types of meetings are better to be done remotely.

BDO is here to help with current and future challenges

Setting precautionary measures for your business to handle a global pandemic is one thing, but being prepared for the aftermath of business disruption is another. That's why it's important to have a plan in place so that you can react in time.

In addition to whatever support and guidance your business needs in the midst of COVID-19, we can help you calculate the costs of a business interruption. Our professionals can also assist you in advance of a claim to determine insurable values.

Contact us to find out how we can work through these uncertain times together and help your business be prepared.

Contact us

This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our privacy statement for more information on the cookies we use and how to delete or block them.

Accept and close