Commercial Insurance Recoveries from Hurricanes and Other Disasters by Daniel S. Hughes

Posted on August 16, 2013 by Daniel Hughes

Hurricanes are one of the most significant environmental catastrophes that threaten the state of Florida, the Gulf Coast region and areas as far north as New York and New Jersey. Property owners are likely to suffer millions of dollars in property damage and many businesses may be forced to shut down temporarily or permanently. Hurricanes, like any disaster, require an expedient and well-thought-out plan to minimize the economic losses of those affected.

In the aftermath of a storm the route of recovery for each business will be determined based on the specific facts and circumstances giving rise to the loss after consultation with the appropriate professionals (i.e. lawyers, accountants, and/or governmental officials).  

Some businesses may obtain benefits from federal or state emergency fund programs but most will turn to their commercial insurance policies for recovery.  Whichever route of recovery is chosen the key tasks will be:

Following are some tips to assist businesses with planning and gathering key documents to support a claim that results from the adverse impacts of hurricanes and other natural disasters. 

Physical Damages

Activities which are undertaken during the initial days after a loss may include:

–        Analysis of the cause and origin of the loss

–        Structural analysis of the remaining facilities

–        Determination of the scope of physical damage

–        Consensus on scope of damage with insurer’s representative

–        Conduct a count of damaged/destroyed inventory

It’s recommend that business owners create a video recording of the damage as soon as possible after the loss.  A narrated video provides an inexpensive ounce of prevention if there are future disputes with insurers about specific damage.  Once the above items are completed, the company should quickly begin repairs. 

The ability to recover dollars a business owner spends to repair or replace damaged property or the costs associated with removal and clean up will generally require evidence to show that it is loss-related, as well as corresponding repair estimates or actual invoices and evidence of payment for the repair/remediation work performed. 

These documents should be safely kept and clearly marked “Hurricane Loss.” A business should consider special coding within its accounting system in order to improve organization and ease retrieval of the information. This also segregates these expenses from normal operating costs. 

Economic Damages and Lost Profits

Typically businesses that have been impacted by disasters such as hurricanes will claim for their resulting lost profits.  Forensic analyses can be conducted to provide an estimate of lost profits resulting from the incident. 

Once a forensic accountant is engaged, the next step is to begin gathering and analyzing the financial data of the business.  The range of financial data requested typically includes:    

It is also valuable to gather relevant and appropriate documentation to support a loss or claim for economic damages attributable to a specific event. The types of records to obtain and track can include:

Cancellations are often related to a loss. In these instances, it is important to keep a record of the name and contact information for the business or individual that placed the original order or reservation along with an estimate of the revenues lost as a result of the cancellation. 

Obviously data is important to validate a claim. Other documentation that may useful includes:



In the aftermath of any disaster, an expedient and well-thought out plan and response is critical to minimizing the losses and ensuring the long-term viability of a business. Dedication of resources to manage and navigate the claims process will increase the likelihood of a favorable settlement.

Forensic accountants can play a significant role in assisting with the financial recovery. We have extensive experience in helping clients prepare, document and defend commercial insurance claims that result from natural or man-made crises.



About the Author: Daniel Hughes CPA/CFF is a director in the Forensic and Business Services practice of Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail