Business interruption insurance for manufacturers: a guide to coverage and claim presentation

Business interruption insurance, designed to place the insured in the same economic position it would have been in had no loss occurred, is essential to the restoration of manufacturing operations following a disaster. The most confusing technical concepts of business interruption insurance include: 1. insurable interest, 2. period of suspension, 3. coinsurance, 4. expense classification, and 5. expenses to reduce the loss. Preparing the business interruption claim requires identification of the manufacturer's planned results prior to the loss versus the actual results after the loss. To determine planned results, specific management information must be blended and gross earnings calculated. Next, noncontinuing expenses are subtracted from gross earnings to arrive at the loss recovery. A manufacturer's chief financial officer, controller, and accounting staff will play key roles in preparing the business interruption claim. Illustrations.