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The coronavirus ripple effect and impact of shelter-in-place orders, supply chain disruption, event cancelations and business closings for certain geographic areas and industry sectors such as travel and tourism, technology, apparel, industrial equipment manufacturers and more are causing disruption across the economic landscape. The totality of the financial impact is unknown; however, the losses are widespread and felt by all.
Business interruption due to the current events surrounding coronavirus is impacting businesses today. Policies can be complicated with ambiguous coverage descriptions, including events stemming from various diseases. Additionally, the federal, state and local government response efforts are evolving on a daily basis. The ultimate resolution of these governmental efforts may result in changes to coverage and treatment of interruption losses related to this pandemic. Business owners should review their insurance policies and consult with counsel. It is important that business owners prepare for coronavirus-related events, preserve their right to recovery and quantify their losses under the terms of a business interruption insurance policy.
What can you do to prepare?
First, business owners should review their policy with counsel to understand coverage and assess options. Second, business owners should be proactive in preparing for quantifying the financial impact of a coronavirus-related event on your business. In order to be proactive, a team should be assembled to methodically collect, analyze and organize financial data. An analysis should include both a compilation of specific losses and an analytical review of the financial reports, such as a comparison to historical, budgeted and forecasted results. Third, a business owner should consider utilizing independent experts who can ease the operational burden and offer expertise and professional skepticism to ensure the claim is well supported.
In our experience, the following documents can be critical in documenting and supporting your financial analysis:
A well-prepared team with a well-developed plan will enable your business to be in the best position to compile a robust and well-organized package in the event you file a claim. DGC continues to monitor the current events and legislative changes impacting this topic. We will provide updates as they develop.
If you would like to discuss how DGC can advise you on these matters, contact a member of your client service team or Elisabeth da Silva, CPA, CFF at 781-937-5792 /email@example.com or Jackie Reinhard, CPA at 781-937-5721 / firstname.lastname@example.org. You can also visit our coronavirus web page at dgccpa.com/coronavirus which will be continuously updated with new articles and checklists to help you deal with the impact of the coronavirus on you and your business.
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