The Details That Helped a Small Business Cover a $125,000 Loss
Client Advisor: Max Ieuter
A craft brewery we work with called me when the fermentation tank they had bought less than a year prior broke down. The cooling mechanism had gone out, spoiling all the product they had been fermenting.
In a narrow-margins industry like theirs, the resulting loss (totaling about $125,000) was putting them at risk of not being able to stay profitable and cover payroll and other expenses.
Getting A Complex Claim Approved
This claim had two parts: covering the cost of the lost ingredients from the spoilage and covering the loss of income that would have come from the sale of the finished product, had it not spoiled.
When we first filed the claim, the insurance carrier looked at it under the equipment breakdown coverage clause and denied it because the tank manufacturer attributed the damage to wear and tear.
This didn’t sit right with me nor my client, as the tank’s coolant had been replaced only a year prior. I felt the claim had not been looked at the right way. In fact, the field adjuster had not even conducted a physical inspection of the tank.
I began to press the claims adjuster and together we found a different clause in the insurance policy that would get the claim approved under spoilage coverage.
However, the business income loss part of the claim (about $100,000) was complex and nuanced, as these types of losses usually are. I realized that the claims accountant wanted to assign only a small fraction of what we were asking because he did not have a complete grasp of the case. So, I orchestrated meetings with the client’s CFO to review financials and ensure all parties understood the full scope of how the equipment failure had affected the business operation expenses.
Ultimately, this allowed my client to recover the full amount of the loss!
The Takeaway
When it comes to business losses, three factors can determine your ability to recover:
Your choice of insurance carrier
The way your policy is written
A hands-on advocate who knows how to work the process
In this case, we had set up our client with a carrier that had the capacity to take on the true nature of their risk. In addition, the policy itself offered the necessary breadth that allowed us to get the client’s loss covered.
In addition, we didn’t take the initial denial at face value. Instead, we used our expertise and direct involvement to make sure that the claim was looked at from every possible angle and that the claims adjuster and accountant had a clear understanding of what had really happened and its impact on the business.