Part II of II In the previous article, we posed a series of questions to consider when purchasing cyber insurance. In Part II, the authors identify not only how to answer some of the questions posed initially, but also, what value those answers bring. Moreover, the authors identify some of the common gaps and how to address them. Introduction In the previous article, we posed a series of questions to consider when purchasing cyber insurance. Our approach was deliberate: the right questions help get you the right insurance to address cyber risks facing your organization. Remember, seek the right coverage…
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Two Major Approaches Adopted by Courts Assessing Claims This article discusses the challenges that COVID-19 and other recent catastrophes present when calculating business interruption claims. It surveys the two common approaches adopted by courts, examines their outsized impact on an insured’s recovery, and discusses how the influx of new decisions will change the business interruption landscape. It also analyzes how the underwriting process is evolving to account for the economic impact of these recent disasters. Courts across the globe are flooded with business interruption insurance claims arising out of the COVID-19 pandemic, extreme weather events, cyberattacks, and other catastrophes. COVID-19…
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Following a Ransomware Attack As businesses continue to rely on computers and digital storage of important data, cyberattacks are a growing potential threat to these organizations—especially now, as businesses have transitioned their workforces to work remotely. There are many types of cyber threats, and the pandemic has driven a surge in ransomware attacks. Ransomware is malware specifically designed to disrupt, damage, or gain unauthorized access to a computer system. The threat actor employs encryption to hold a victim’s information at ransom. In this article, the author discusses what sets cyber BI claims apart from other BI claims. Introduction As businesses…
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Relating to a Business Interruption Claim (Part I of II) It remains unclear whether business interruptions caused by the current novel Coronavirus pandemic will be covered under business interruption insurance policies because insureds and insurance companies are still arguing whether the pandemic and/or related state and/or local government shutdown orders qualify as “physical damage.” While litigation on the issue has begun, at the time of authoring this article, no courts have made a final decision on that question. The purpose of this two-part article is to consider the nature, timing, and extent of the information and/or documentation that logically should…
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What Forensic Accountants Need to Avoid Doing What do forensic accountants need to know when performing a business interruption loss engagement? What are some of the common errors and pitfalls that forensic accountants need to avoid? In this article, the author will answer these questions as well as walk through the process of performing a business interruption loss engagement. [su_pullquote align=”right”]Resources: Business Interruptions and Lost Profits [/su_pullquote] When natural disasters or damages occur and business operations are interrupted, forensic accountants are an invaluable tool for both the insured and the insurance companies. Forensic accountants are engaged to calculate a fair…
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A Unique Assessment of Commercial Damages Business interruption is a form of commercial damages that may include both breach of contract and torts. While it is not common for financial experts to be hired in business interruption situations, some claims require their expertise. Unlike a traditional lost profit analysis, business interruption calculations are unique. Any expert asked to make such an analysis should consider lost profits (projected revenue for the loss period less saved expenses), non-saved expenses that are ongoing during the interruption, and extra or expedited expenses the business has to incur to reopen. This article addresses the work…
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Advise for Budding and Experienced Experts The third edition of The Comprehensive Guide to Lost Profits and Other Commercial Damages is marked departure from the prior editions. This two-volume set is replete with valuable information and insight from experienced practitioners.
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While the vast majority of jurisdictions have moved away from the new business rule and adopted the modern new business rule, by which new/unestablished businesses can recover damages, such adoption does not diminish the requirements under the reasonable certainty standard. Given the lack of historical financial performance data and under the lens of the reasonable certainty standard, estimates of lost profits damages to new/unestablished businesses are subject to a higher level of scrutiny. This article focuses on new/unestablished businesses and the importance of post-incident business-specific data/facts to isolate the effects of the disputed event, and to establish a measure of…
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Preparing yourself and your clients for a natural disaster By taking steps before a natural disaster strikes, the firm can position itself to thrive in the aftermath. A meeting with your casualty insurance professional is suggested. The agenda should include a review of the current coverage and discussion of changes in your firm operation since the last review.