Business Income and Interruption Claims After a Hawaiʻi Storm

For many Hawaiʻi businesses, the building damage is the smaller loss. Weeks of closed doors, cancelled bookings, missing tourist traffic and payroll that still has to be met can cost far more than the repairs. Business income coverage exists for exactly this. But it is also one of the most technical parts of a commercial claim, and it is only as strong as your records.

The coverages to look for

• Business income. Replaces the net income you would have earned, plus continuing normal operating expenses such as payroll, rent and loan payments, while the damaged property is being restored.
• Extra expense. Pays reasonable costs to keep operating or to reopen sooner, such as a temporary location, rented equipment or expedited shipping. On common forms it starts right away.
• Civil authority. May respond when a government order prohibits access to your business because of damage to nearby property. On a widely used commercial form, it applies within one mile of the damaged property and lasts up to four weeks.
• Extended business income. Covers the slow ramp-up after you reopen, often up to 60 days on a common form and longer if you bought more.
• Utility service and dependent property. Losses from off-site power or water outages, or from damage to a key supplier or customer, are usually covered only by an endorsement.

How the loss is usually measured

Business income is not simply “what we lost in sales.” Insurers generally look at what your net income would have been had the damage not happened, then add back the expenses that continued. That makes your history and your seasonality the heart of the claim.

• Your normal pattern: two or three years of monthly sales show what a typical month looks like, including Hawaiʻi’s busy and slow seasons.
• Your trend: were you growing before the storm? New contracts, bookings or a recent expansion should be part of the picture.
• Continuing expenses: payroll, rent, loan payments, insurance, subscriptions and anything else you kept paying while closed.
• Expenses that stopped: some costs, such as merchant fees on sales you did not make, go away during a closure and are usually subtracted.

The waiting period and the period of restoration

Many commercial policies do not start paying business income until a waiting period has passed, commonly 72 hours after the damage. Extra expense usually starts right away.

Business income then continues for the period of restoration, which on common forms is the time it should reasonably take to repair or replace the damaged property, not necessarily how long it actually took. In Hawaiʻi that matters. Barge shipping, special-order materials, permit reviews and limited contractor availability can all stretch a timeline well beyond a mainland estimate. Your claim should explain the real island timeline, with documents.

Records that prove the loss

• Monthly sales for the past two or three years, by location if you have more than one
• Profit and loss statements and recent tax returns
• Bank statements, payroll records and continuing bills such as rent and loans
• Booking, reservation or contract records showing cancellations
• Receipts for every extra expense, kept separate from normal spending
• Dates of closure orders, road closures, power and water outages, and reopening

Common mistakes

• Waiting to file until the business reopens
• Mixing storm expenses in with normal operating costs
• Using a single bad month as the baseline instead of a full seasonal history
• Underestimating how long restoration really takes on the islands
• Forgetting the slow months after reopening, when extended business income may apply

Bring in your accountant early

On larger losses, your CPA or bookkeeper is one of the most important people on the claim. They can prepare a clear loss calculation from your actual records. We often work alongside a business’s accountant: they build the numbers, and we connect those numbers to the policy and present the claim to the insurer.

Common Questions