Loss of Earnings/ Profits and Consequential Loss


 

Loss of Earnings

Unforeseen events such as floods, fires and robberies, to name but a few, will invariably have an adverse effect on the financial position of businesses and individuals in many ways. In those cases where insurance cover is provided, a claim is likely to arise for financial loss. We are instructed either by an insurer to review a claim, or formulate one for the insured person.

Consequential Loss

Sometimes, the calculation of the claim is relatively straightforward but, more often than not, it is complicated. That is because of the number of inter-relating factors that are involved, and the cause and effect of financial consequences are not always entirely clear.

How we can help

    • As a starting point, our forensic accountants fully investigate the incident. They determine what the financial position of the insured party was immediately before the insured event occurred; what happened to cause that position to change; and gain an insight into what effects those changes might have had on the financial position.

 

    • Our forensic accountants then review the insurance policy to see what it covers and whether it specifies how claims are to be made, or how they are to be calculated.

 

    • Then it is a question of adopting a ‘what if’ process, trying to ascertain and provide evidential proof of what might reasonably have happened had the insured event not occurred, and what actually occurred as a result of the incident. We then calculate a value for the difference between the financial outcome of the two scenarios.

 

  • Our reports sometimes need to include an extremely clear and detailed explanation which can be understood by a non-accountant. They explain the financial processes which were in place at the time the insured event occurred so that they can be compared and contrasted with what took place afterwards. In this regard, we find that a variety of evidential types will help to convey the message, including diagrams and photographs.

For more information, please contact us.