As we continue to experience the devastating consequences of COVID-19, we realize that most businesses—whether they have been forced to close or not—will suffer losses of some kind. Though we face different situations, most of us are encountering loss from some combination of required closure, reduction of sales, employee absence, and the risk of exposing customers, clients, and employees.
Many businesses have insurance policies that would provide businesses insurance funds to cover lost profits and damages. If you have not already done so, it is vitally important to review your insurance policies to determine if you are covered. Some policies directly say that losses incurred as a result of a virus will not to covered. Others are silent on this issue. It is anticipated that coverage of losses caused by COVID-19 will initially be denied. The insured parties should contact their insurance providers and attorneys to determine if you are covered.
Below is a partial list of documentation needed to support a claim for lost profits/damages.
- Financial statements
- Income tax returns
- Projections of lost revenues/damages
- Payroll records
- Payment made to essential workers that the company would have difficulty replacing
- Sales tax returns
- Employment contracts
- Business plans
- Monthly sales data for seasonal businesses
- Loan documents and agreements
- Contracts involving sales of assets
We also suggest that insured parties track costs that normally would not have been incurred if not for COVID-19 such as cleaning supplies, overtime for employees, increased costs of inventory to name a few.
As with the disaster relief programs, insurance providers expect to be inundated with lost profits and damages claims. We therefore are recommending that all insured parties compile all necessary component parts of your claim along with projections that support the amount of your claim. Our team of dedicated expert professionals have successfully assisted numerous clients and their attorneys with insurance claims and other disaster relief programs. We are here to assist you.
Please contact Catherine T. Marchelletta, CPA, MST, Partner at [email protected] or 412-281-8771 for further guidance and inquires.