Christopher A. Welde Director – ParenteBeard Chris.Welde@ParenteBeard.com 215 972-2364

1. Preparing, Supporting, and Settling a Business Interruption Claim March 21, 2013 Christopher A. Welde Director – ParenteBeardChris.Welde@ParenteBeard.com215 972-2364

2. Types of Insurance Claims • Fidelity Bond • Surety • Professional Malpractice (Errors & Omission) • Directors & Officers • Property & Casualty (*Today’s Focus*)

3. Our Example - Claim Categories • Property (Buildings) • Furniture, Fixtures & Equipment • Inventory • Business Interruption (*Today’s Focus*)

4. Preparing a ClaimBusiness Interruption Claim Categories • Lost Profits • Ordinary Payroll • Extra Expenses

5. Preparing a ClaimBusiness Interruption - Covered Loss • Five Basic Elements - BI: • Covered Event Occurs (e.g., fire) • Results in loss/damage to covered property (e.g., manuf. / storage facility) • Results in interruption of business operations • Results in a covered loss (i.e., covered by policy) • During the Period of Restoration (i.e., damage period)

6. Preparing a ClaimBusiness Interruption – Covered Loss • When Insured’s Property is not Damaged (extension of coverage): • Service Interruption • Contingent Business Interruption • Ingress/Egress • Civil Authority

7. Preparing a ClaimBusiness Interruption - Coverage Issues • Covered Loss • Covered Property • Damage Period • Period of Restoration • Extended Period of Restoration • Deductibles / Waiting Period • Coverage Limits • Professional Fees

8. Supporting a ClaimBusiness Interruption – Loss Formulas • Compare what “Should Have Happened” to what “Actually Happened” • Lost Revenues – Saved Expenses = Lost Profits (Top Down Approach) • Lost Income + Continuing Expenses = Lost Profits (Bottom Up Approach)

9. Supporting a ClaimActual Results – Existing Facility

10. Should Have Been Results v. Actual Results – Existing Facility

11. Supporting a ClaimActual Results – New Facility

12. Should Have Been Results v. Actual Results – New Facility

13. Supporting a ClaimSaved Expenses v. Continuing Expenses • Saved Expenses (i.e., Variable): • COS (materials, labor, shipping, storage) • Operations (commissions, payroll taxes, utilities) • Continuing Expenses (i.e., Fixed): • Operations (advertising, insurance, accounting fees, legal fees)

14. Supporting a ClaimBusiness Interruption – Loss Formulas • Compare what “Should Have Happened” to what “Actually Happened” • Lost Revenues – Saved Expenses = Lost Profits (Top Down Approach) • Lost Income + Continuing Expenses = Lost Profits (Bottom Up Approach)

15. Supporting a ClaimOrdinary Payroll • Non-Officers, Executives, Managers, etc. • Covered Period (60 days) • To extent payroll would have been paid/earned had no Covered Event occurred

16. Supporting a ClaimExtra Expenses • In excess of normal expenses: • Security Costs • Clean-up Costs • Temporary Offices • Rental of Equipment

17. Supporting a ClaimBusiness Interruption Claim • Lost Revenue • Less Saved Expenses = Lost Profits • Plus Ordinary Payroll (continuing expense) • Plus Extra Expenses

18. Settling a ClaimInteraction with Insurance Carrier • Submit Proof of Loss (Claim) • Present Claim to Insurer • Provide Support • Insurer’s Analysis of Claim • Insurer’s Accountant • Interaction with Insurer’s Accountant • Respond to Document Requests • Answer Questions

19. Settling a ClaimInteraction with Insurance Carrier • Review and Respond to Rebuttal Report • Meet with Insurer • Discuss Claim and Rebuttal • Settlement Discussions/Negotiations • Settle Claim; or proceed to Litigation • Subrogation • Insurer v. Culpable Party

20. Business Interruption – Preparing • Planning and Preparing • Insurance Policy – Coverage / Notice • Insurance Broker / Accountant / Attorney • Plan the Recovery of your Business / Changes? • Proof of Loss (Claim)

21. Business Interruption - Supporting • Loss Categories - Supporting • Replace / Remediate Damaged Property • Support Losses • Historic Trends, Budgets • Saved v. Continuing Expenses • Ordinary Payroll • Extra Expenses

22. Business Interruption - Settling • Submit and Present Proof of Loss • Assist Insurer in its Analysis Process • Supporting Documents • Questions • Meetings and Settlement Negotiations • Subrogation

23. Preparing, Supporting, and Settling a Business Interruption Claim March 21, 2013 Christopher A. Welde Director – ParenteBeardChris.Welde@ParenteBeard.com215 972-2364