Information required to lodge a COVID-19 Business Interruption Claim
Businesses can lodge a business interruption (BI) claim at any time, and insurers will respond on a case-by case basis.
This list of information provides a general outline of the documents and information required by Insurers to consider and assess the claim. As each claim is different insurers may also require additional information, depending on such factors as the period of time that a business has been impacted, the nature of the business and the type of loss suffered.
In managing BI claims arising from COVID-19 insurers will need to consider the terms of the relevant policy and the basis upon which the relevant policyholder claims its business has been affected by COVID-19. However, insurers have collectively agreed (via the Insurance Council of Australia) to consider the extent to which claims below a certain value or claims of a certain type, might be able to be fast-tracked. This may include claims by vulnerable customers to address particular circumstances relating to their BI claim. Where a fast-track process is appropriate it is envisaged that insurers will quickly proceed to both an assessment of a particular claim (once the standard documents and information required to submit a BI claim have been provided to the insurer) and a decision about the claim. Further clarification as to whether and how a claim can be fast-tracked will be provided by each insurer.
Documents required:
- Historical BAS Lodgements for years: 2019, 2020 and 2021 (if available).
- Historical Financial Year Profit and Loss Statements including detailed trading account summary for years: 2018, 2019, 2020 and 2021 (if available).
- If available Historical Quarterly Profit and Loss Statements for the following years: 2019, 2020 and 2021 (if available).
- If available Historical Monthly Profit and Loss Statements for the following years: 2019, 2020 and 2021 (if available).
- If necessary and available Historical weekly trading figures.
- Summaries of Job Keeper payments and any other payroll benefits received from State or Government Authorities in connection with COVID-19 support.
- Details of any other Federal or State COVID-19 support grants received including:
– Name of grant
– Criteria for obtaining grant
– Value of the grant
– Date each grant payment received if not shown in Profit and Loss Statements. insurancecouncil.com.au - Copy of any correspondence between the Insured/Landlord regarding the waiver, deferment or abatement of any rent during the interruption period.
- Details of an Increased Cost of Working that have been incurred to reduce the loss of turnover suffered by the business or to maintain normal operations, which may be recoverable.
– Additional costs typically include advertising, overtime, rent, cleaning and machinery hire costs.
– Any claim should include details of the nature and the reason for the increased expenditure, including a copy of the invoice(s) relating to the expenditure. - Franchise Agreement (if applicable)
- Lease Agreement (if applicable) Information required
- Provide location and details of any localised COVID-19 outbreaks.
- Provide details of your business’ normal daily/weekly trading hours.
- Provide details of whether your business was ordered to close or to alter its operations by a Government Authority, Health Department or Local Council due to COVID-19 or as a result of having COVID-19 diagnosed at the insured premises. If so, please provide:
– a copy of letter/email from the relevant Government Authority and dates of actual closure of business. - Provide details of whether your business was able to operate, even in a reduced capacity, during periods of COVID-19 lockdown, for example by adopting a web-based sales platform or by operating as take away only. If so, please provide:
– dates when such restricted trading activities were possible.
This list is for guidance only as each claim will be different and each insurer may require additional material. However, by preparing the material detailed in this list, the insurer will be able to assess your claim more efficiently.
MORE INFO
Establishing business interruption loss due to COVID-19
Overview
COVID-19 has impacted small businesses across Australia. Businesses have closed or operated at reduced capacity, resulting in the loss of trade and profit.
Due to the extent and complexity of COVID-19 business interruption claims, test cases commenced to clarify issues related exclusions and common covering provisions. We are still waiting on the outcome of the second test case. The outcomes of the test cases will guide the application of insurance policies to small business losses.
While we wait for the outcome of the second test case, we encourage small businesses that have a claim or intend to make a claim, to gather relevant financial records now to establish the extent of their business loss. Collecting the relevant documents to support your claim while they are readily at hand may help make your claims experience easier. This will help your insurer establish business interruption losses, so any losses that are claimable can be settled in a timely manner.
If you experience a problem with your claim and lodge a complaint with AFCA, having this information ready will help us investigate the specifics of your complaint.
Establishing your business interruption
Whether your business has closed, or continues to operate in a reduced capacity, you will need to provide financial documentation to quantify the financial loss due to COVID-19. Evidence will need to show the level of reduced revenue through the period of cover.
A revenue comparison of the indemnity period to a normal or average period may assist. For existing businesses, financial performance over the same period in prior years could be reviewed to form a revenue baseline. Allowances could then be introduced based on market and other influences.
Most insurance policies outline information required to assess a claim
To substantiate financial loss, you should be prepared to submit evidence when lodging a business interruption claim.
In most instances, the product disclosure statement (PDS) that provides the terms and conditions of the insurance cover, outlines the information which an insurer requires to assess a business interruption claim.
You should review your PDS as it may highlight the information your insurer requires from you.
If you are not certain what financial information your insurer requires, you can contact your insurer or broker to seek this information.
Financial records that assist to establish business loss
We encourage small businesses that have a claim or intend to claim, to start gathering relevant financial information as soon as possible.
This list is not exhaustive. You should consider the circumstances of your loss and provide other relevant information that helps to establish your claim or extent of the loss.
Confirming income
- Trading and profit & loss accounts printout from a Management Information System (MIS) for the 12-month period prior to the indemnity period (MYOB, QuickBooks, Xero, or other management information systems used for bookkeeping)
- Separate trading and profit & loss accounts printout from MIS for the indemnity period
- Business Activity Statement (BAS) with ATO receipts to verify the gross income for the 12-month period prior to the loss and the indemnity period. Be prepared to produce the same for the previous financial years
- Receipts and details of any additional costs expended for sustaining the business during the indemnity period. This may include re-location costs for moving to, operating from, any temporary location or any other mitigation cost incurred
- Also consider any reduced business costs your business may have achieved through the indemnity period, such as holding less or no stock or reduced utilities consumption.
Confirming payroll costs in the event your policy covers payroll
- MIS payroll confirmation; or
- Payroll distribution verification (if outsourced); or
- Business transaction account bank statements referencing wages paid; and
- Evidence of monthly JobKeeper funds received/paid as a contribution to salaries/wages.
In addition to the above, the following information may be useful
- Copy of any specific government orders received
- Details of any Government (State and Federal) COVID-19 support grants received
- Subject to the circumstances of the loss, any further relevant information that establishes the extent of loss
ABOUT US
COMPLIANCE
SCORESBY HEAD OFFICE
Toll free: 1800 245 123
Phone: (03) 9835 1300
info@abcountrywide.com.au
Level 2, 35 Dalmore Drive
Scoresby VIC 3179
DROUIN OFFICE
Toll free: 1800 245 123
Phone: (03) 5625 1015
drouin@abcountrywide.com.au
3 Bank Place, Drouin VIC 3818
LEONGATHA OFFICE
Toll free: 1800 245 123
Phone: (03) 5662 4222
leongatha@abcountrywide.com.au
63 Bair St, Leongatha, VIC 3953
