No Claim is Easy

A tank farm. 

How hard should that be to calculate a business interruption loss? Put liquid in tank, charge rent. Apartments for commodities. Simple!

Tank damaged, move liquid, calculate lost rent…

That is until the liquid is molasses.

Molasses is a food product. It is not like fuel oil or kerosene.

It is difficult to transfer and transport. Especially when it is being transported by both truck and ship. The tank must be close to the dock, otherwise the molasses must be transferred to trucks then off-loaded onto ships. A very expensive extra step.

The accountant for the insurance company, eager to finish the claim, put a $118,000 price on the business interruption and extra expense claim. Not recognizing the difference between molasses and any other petrochemical type of commodity, a quick business interruption model was prepared in support of this claim amount.

Talking with the owner of the tank farm and reading the contracts, documents and food regulations; I realized this was going to be much more expensive.

Long story short, repairing the ruptured tank to again be able to hold a food product commodity was very expensive. The tank had to be repaired, cleaned and the heater replaced. (Cold molasses doesn’t flow well into trucks and ships)

While the repair was being made, the molasses had to be stored in several other tanks, retrofitted to hold a food product. Additional expenses were incurred in the transfer of molasses to trucks and barges.

All in, the claim settled for close to $950,000. This is a lot more that the initial calculation presented by the adjuster and their accountant for $118,000!

See why it pays to get help?

This client had claims preparation coverage, which meant they got $950,000 for the claim in addition to the amount of my fees.

Preparing a claim is much more than a financial exercise. It requires an understanding of the underlying business.

Its all about telling the business story.