? Do you want to know how insurance companies figure out loss of earnings after property damage?
What is loss of earnings?
Loss of earnings means the money you cannot earn because damage happened to your property. You may own a small shop, rent out a house, or work from home. You may lose income when your place cannot operate. Insurance can pay for that lost income if your policy covers it. You must prove the loss to get paid.
Who handles loss of earnings claims?
You, your insurer, and a claims handler work on the claim. You may also hire a public adjuster to help you. A public adjuster acts for you. The adjuster studies your policy, checks the damage, and negotiates with the insurer. If you live in Florida, a trained public adjuster can help a lot after a hurricane or storm.
Why this matters in Florida
Florida faces hurricanes, storms, and heavy rain. These events can force people to close businesses or leave homes. You may lose weeks or months of income. Florida insurance rules affect how the company pays. You need clear records and good help to get what you deserve.
Basic idea insurers use to calculate loss of earnings
Insurers follow a few clear steps. They check the cause and the covered time. They compare money you earned before the damage to money you would have earned. They add extra costs you had to pay because of the damage. They then apply your policy limits and deductibles. This process gives the amount the insurer owes you.
Key terms you should know
- Policy period: The time your insurance covers.
- Covered cause: The event your policy pays for, like wind or fire.
- Period of restoration: The time the insurer covers while you repair or replace the damaged property.
- Gross earnings: Money you take in from sales or rent.
- Net income: Money left after you pay business costs.
- Extra expense: Additional costs you must pay to keep working.
- Waiting period: The time you must wait before the policy pays business income.
- Limit: The maximum the policy will pay for loss of earnings.
Step 1: Show the cause and show that the policy covers it
Insurance pays when a covered event causes the loss. You must show the damage came from a covered cause. You must show the damage stops your normal earning. You should keep photos, repair reports, and police or contractor notes. These items prove the cause and effect.
Step 2: Establish the period of restoration
The period of restoration starts when damage happens. It ends when you fix the property or when you replace damaged items. Insurers use this period to limit how long they will pay. You must show how long you could not earn because of the damage. Keep receipts and dates for repairs. Keep records of when you could, or could not, open for business.
Step 3: Gather the financial records insurers need
Insurers want numbers. They want to see what you earned before the damage. They want what you earned after the damage. They want proof of your normal expenses. You must gather:
- Tax returns for the last 2–3 years.
- Profit and loss statements.
- Bank statements.
- Sales receipts and invoices.
- Payroll records.
- Lease agreements and rent rolls.
- Contracts you could not fulfill.
- Bookkeeper or accountant reports.
You must show bills for extra expenses. You must show canceled checks and receipts. These items help you prove the loss.
Step 4: Calculate baseline earnings
Insurers use a baseline to know what you would have earned. You must show your normal income before the damage. The baseline often uses the same time last year or an average of the last two or three years. This method helps if your business changes through the year.
Example:
- Year 1 sales: $120,000
- Year 2 sales: $150,000
- Year 3 sales: $130,000
Average sales = ($120,000 + $150,000 + $130,000) ÷ 3 = $133,333
The insurer uses this figure to compare what you should have earned.
Step 5: Calculate the actual lost earnings
You compare baseline earnings to actual earnings during the period of restoration. Subtract actual earnings from baseline earnings. The difference shows the lost earnings.
Simple formula:
Lost earnings = Baseline earnings − Actual earnings during the loss period
If your business earned some money during repairs, you reduce the lost earnings by that amount. You cannot claim the whole baseline if you made some income.
Step 6: Add extra expenses that reduced your loss
Your policy may pay extra expenses. Extra expenses are costs you pay to reduce the loss. Examples include renting temporary space, buying equipment to keep working, or paying overtime. Add these costs to the lost earnings if the policy covers them.
Simple formula:
Total claim = Lost earnings + Extra expenses
Insurers want proof of these extra costs. Keep receipts and contracts.
Step 7: Apply policy limits, waiting periods, and deductibles
You must apply the policy rules. The insurer looks at the waiting period. The insurer subtracts the deductible. The insurer applies any limits or coinsurance clauses. After these steps, the insurer gives a final payment offer.
- Waiting period: The insurer does not pay for the first set of hours or days.
- Deductible: The insurer subtracts your agreed deductible.
- Limit: The insurer will not pay more than the maximum in your policy.
- Coinsurance: You may bear part of the loss if you did not carry enough coverage.
Table: Simple claim example components
| Item | Amount |
|---|---|
| Baseline earnings (60 days) | $30,000 |
| Actual earnings (60 days) | $6,000 |
| Lost earnings | $24,000 |
| Extra expenses | $3,000 |
| Subtotal | $27,000 |
| Waiting period (3 days) | −$1,500 |
| Deductible | −$500 |
| Policy limit | $50,000 |
| Final payable amount | $25,000 |
This table shows how components change the final payout.
How insurers check your numbers
Insurers may use their own adjusters. They may hire forensic accountants. They may ask for more records. The insurer may audit your books. This review can take time. You can also hire a public adjuster or an accountant. They work for you. They can present numbers in a clear way.
When you need a public adjuster
You should hire a public adjuster when the loss is large, when the insurer denies part of the claim, or when the insurer offers a low settlement. A public adjuster knows the claim process. A public adjuster reads the policy language. A public adjuster builds your paperwork. In Florida, a public adjuster also knows state rules and local repair costs.
How a public adjuster like Otero helps you
A public adjuster inspects the damage. The adjuster calculates your loss. The adjuster prepares a claim packet for the insurer. The adjuster negotiates with the insurer. The adjuster can reduce stress. Otero Property Adjusting & Appraisals works on these claims in Florida. Otero only gets paid when you get paid. Otero gives a free initial inspection. You can call Otero for help after floods, storms, roof leaks, or fires.
Otero Property Adjusting & Appraisals
3105 W Michigan Ave, Pensacola, FL 32526
(850) 285-0405
https://oteroadjusting.com/
Common items insurers accept for proof
Insurers look for honest proof. You can give the insurer:
- Tax returns.
- Profit and loss statements.
- Bank statements.
- Sales receipts.
- Payroll records.
- Vendor invoices.
- Lease agreements.
- Repair invoices and contractor bids.
- Photos and videos of damage.
- Business interruption insurance forms filled by your accountant.
Keep these items organized. You may need copies.
Common mistakes that hurt your claim
- You delay reporting the claim. Report early.
- You accept the insurer’s first offer without checking it.
- You lose bills and receipts. Keep copies.
- You fail to track extra expenses. Save receipts.
- You do not document when you close and reopen. Note dates.
- You try to fix property without approval. Ask before you rebuild.
A public adjuster can help you avoid these errors.
Example: Bakery in Florida — full walkthrough
You own a small bakery in Pensacola. A hurricane damages your roof. You must close the bakery for 60 days. You want to claim loss of earnings.
Step 1: Show cause and damage
- You take photos of the roof and water damage.
- You get a contractor estimate.
- You file a claim with your insurance.
Step 2: Determine period of restoration
- The contractor says repairs will take 60 days.
- The insurer may agree on the same period.
Step 3: Gather records
- Your tax return shows yearly sales of $240,000.
- Your profit and loss shows monthly sales of $20,000.
- Your bank statements confirm deposits.
Step 4: Calculate baseline earnings for 60 days
- Monthly average = $20,000.
- Two months baseline = $40,000.
Step 5: Calculate actual earnings during closure
- You sell limited online items for $6,000.
- Actual earnings = $6,000.
Step 6: Calculate lost earnings
- Lost earnings = $40,000 − $6,000 = $34,000.
Step 7: Add extra expenses
- You rent a small temporary oven space for $2,000.
- You pay delivery costs of $1,000.
- Extra expenses = $3,000.
Subtotal = $37,000.
Step 8: Apply waiting period and deductible
- Policy waiting period = 72 hours. That equals three days or $3,000 in lost sales.
- Deductible = $1,000.
Final payable = $37,000 − $3,000 − $1,000 = $33,000.
You can dispute the insurer if they offer less. You can hire Otero to review the numbers.
Table: Bakery example
| Item | Amount |
|---|---|
| Baseline (60 days) | $40,000 |
| Actual earnings | $6,000 |
| Lost earnings | $34,000 |
| Extra expenses | $3,000 |
| Waiting period | −$3,000 |
| Deductible | −$1,000 |
| Final payable | $33,000 |
Seasonal businesses and growth
If your business grows or slows each year, use the trend to set the baseline. Use accountant help to show normal growth. Insurers accept a pro-rated baseline when you prove it. Show past sales, marketing contracts, and orders you lost due to the damage.
Rented property and loss of rent
If you rent out property, loss of earnings may mean lost rent. You must show the lease and the rent roll. You must show that tenants could not live there because of damage. If you re-rent the unit to a new tenant at a lower rate, show both rents. Insurers will pay the difference when the policy covers loss of rent.
Extra expense vs. loss of earnings
Extra expense pays costs to continue operations. Loss of earnings pays lost profits. Your policy may cover one or both. Read your policy carefully. If the policy covers extra expense, keep receipts and invoices.
How insurers treat payroll and employees
Insurers look at payroll to decide net income and extra expenses. You may still have to pay employees during repairs. If you did that to keep staff, the insurer may cover payroll as extra expense. You must show payroll records and explain why you kept paying.
What if you run a home-based business?
If damage to your home stops your work, you may have a claim. You must show your business income and that the damage forced you to stop work. You must check your homeowner policy for coverage for business loss. Many homeowner policies limit business-related payouts. A public adjuster can help you read the policy.
Disputes and appeals
If the insurer denies or underpays, you can dispute the decision. You can file a complaint with the Florida Office of Insurance Regulation if you believe the insurer acted unfairly. You can also hire a public adjuster and a lawyer. A public adjuster can reopen negotiations and show more evidence.
How long does it take to settle a claim?
Time varies. Simple claims may take weeks. Large claims can take months. The insurer must investigate. You must gather records. Delays happen when records are missing. A public adjuster can speed the process by preparing strong documentation.
Costs for hiring a public adjuster
Public adjusters usually charge a fee that is a percentage of the recovery. The fee varies by state and claim size. In Florida, many public adjusters charge this way. Otero Property Adjusting & Appraisals works on a contingency basis. Otero charges only when you receive recovery. Otero offers a free initial inspection.
Tips to make your claim stronger
- Report the claim right away.
- Keep good records of sales and expenses.
- Take many photos and videos of damage.
- Save all receipts for repair and extra costs.
- Do not throw away damaged items until the adjuster looks.
- Keep a daily log of when you closed and when you reopened.
- Get contractor estimates in writing.
- Hire a public adjuster for big claims.
How to talk to your insurer
Speak calmly. Tell the facts. Give the insurer clear records. Ask for the policy page that covers loss of earnings. Ask the insurer to explain any disagreement in writing. If you feel stuck, call a public adjuster.
FAQs
Will my insurer pay for lost profits?
Yes, if your policy covers business interruption or loss of earnings and if the cause is a covered event. You must prove the amount with records.
Do I get paid for future lost business?
You get paid for losses within the period of restoration. You must show that the insurer’s covered damage caused the future loss. You need good forecasts and proof.
Can I claim for loss of employees’ tips?
Yes, if your policy covers the income that comes from tips and you can prove it with payroll records and bank deposits.
What if I have partial income during repairs?
You reduce the lost earnings by that income. The insurer pays the difference.
Do I need an accountant to file the claim?
You do not need one, but a forensic accountant can strengthen complex claims. A public adjuster can work with your accountant.
When to call Otero Property Adjusting & Appraisals
Call Otero if you suffer property damage in Florida and you lose income. Otero examines the damage. Otero reviews your policy. Otero prepares the claim. Otero handles negotiations with the insurer. Otero asks for payment only after you receive your claim funds.
Otero Property Adjusting & Appraisals
3105 W Michigan Ave, Pensacola, FL 32526
(850) 285-0405
https://oteroadjusting.com/
Final thoughts
You can prove loss of earnings with clear records. You must show the covered cause and the period of restoration. You must compare baseline income to actual income. You must add extra expenses that you incurred. You must apply policy rules. A public adjuster helps you present the claim in a strong way. If you live in Florida, Otero Property Adjusting & Appraisals can help you. Otero offers a free initial inspection. Otero works only for you and only gets paid when you do.
If you want help, contact Otero. They can guide you through the steps. They can review your policy and show what evidence you need. You do not have to face the insurer alone.
