Estimating Business Interruption Losses: What Lawyers Should Know
When a disaster forces a business to close, the physical damage is only part of the claim. Lost revenue, paused contracts, and employee downtime all add up—but proving those numbers is complex.
Here’s what attorneys need to know about estimating business interruption losses (BIL) and why it’s not as simple as reading a P&L.
1. BIL Is About More Than Lost Sales
It includes:
Net income loss
Ongoing fixed costs (rent, salaries, insurance)
Extra expenses to continue operations
Recovery period extension due to permit or code delays
Your expert should break this down clearly and conservatively—because inflated estimates will get shredded by the defense.
2. You Need Industry-Specific Knowledge
Every business runs differently. A restaurant’s loss period looks very different from a law office or a daycare.
Key questions:
What was the business’s normal operating margin?
Are seasonal fluctuations involved?
Can lost profits be tied directly to physical damage?
Your expert should tailor the estimate to the actual business model, not a one-size-fits-all formula.
3. Documentation Matters
No BIL estimate is accepted without evidence.
A solid report includes:
Pre-loss financials (tax returns, P&Ls)
Payroll records
Expense breakdowns
Proof of continuity issues caused by the disaster
Pro tip: Work with an appraiser who collaborates with forensic accountants if the numbers are complex.
4. Legal Presentation Is Critical
The best estimates don’t just calculate—they communicate. Business interruption claims must:
Support legal arguments for damages
Comply with Florida litigation standards
Be easy for mediators, judges, and juries to understand
Final Thought:
Business interruption is often the most overlooked—but highest-value component in a property damage case. To win it, you need more than a CPA—you need an estimator who understands both the numbers and the law.