Calculating lost income for a business interruption claim generally involves estimating what a business would have earned during the interruption period if the covered loss had not occurred, then comparing that to what the business actually earned during that time.
This typically starts with historical financial data, such as prior years’ income and seasonal patterns, to establish a reasonable baseline for what the business likely would have earned under normal conditions.
Adjustments are often made for known trends, growth patterns, or other factors that might have affected income even without the loss, so the projection reflects a realistic expectation rather than simply repeating past numbers.
Normal operating expenses that continued, or did not continue, during the interruption period are also factored in, since business interruption coverage generally focuses on lost profit and certain continuing expenses, not gross revenue alone.
Because this calculation involves both financial analysis and reasonable projection, appraisers handling these claims often work closely with financial documentation and, in more complex cases, with accountants to help ensure the figures are well supported.
This article is general education about how the appraisal process commonly works. It is not legal advice, and specific procedures can vary by state and policy. If you have questions about your own claim, review your policy language and talk with your insurance company, agent, or an attorney familiar with your state’s laws.
Russ Lis is a working property insurance appraiser and umpire based in Minnesota, serving clients nationwide. Have a question about your own claim? Contact Appraisal Resolution.