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The Effect of COVID-19 on the Insurance Claims Market

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NOTE: This is part one of a series that will be released in the coming days. The series is designed to present thoughtful topics that will affect insurance claims arising from the current pandemic.

At present, the world is currently experiencing unprecedented limitations on import; quarantine, both voluntary and mandatory; business shut down, both enforced and through an abundance of caution; and the cancellation of gatherings, events, and travel. The scope of these limitations is likely to affect almost every commercial enterprise, both directly and indirectly. At J.S. Held we believe it is important to share valuable information with our clients on many emerging issues, including: Time Element considerations for everything from Builder’s Risk claims through regular Period of Restoration on direct property damage, as well as Supply Chain Impact, Ingress/Egress, Civil Authority, Increased Costs of Employees Working Remotely, Idle or Reduced Production, plus Production Restart Costs. [1]

In this first edition, we seek to provide a brief summary of these key topics. Future editions will follow rapidly and provide details into how the current situation is likely to affect claim measurement for each of the areas below.

1. Time Element – Period of Restoration/Period of Indemnity

Physical damage to property results in repair or replacement work that must be performed to return the facility or operation to its pre-loss condition. This timeframe, commonly referred to as the “period of repair” or the “period of restoration”, typically starts on the date of loss and ends when the facility or operation is returned to its pre-loss condition. In addition to all the normal considerations affecting scope of loss and cost, the period of restoration can be impacted by a myriad of what may otherwise be considered abnormal impacts on the typical procedure and timeline to effectuate physical damage repairs. In the case of Builders Risk, the Period of Indemnity may not mirror the Period of Restoration.

2. Time Element – Revenue Projections

The market has changed, which affects both existing and future Business Interruption measurements. Mandatory and elective closings create idle periods. Customer demand has changed, and historical projections may no longer be accurate.

3. Supply Chain Impact

Materials necessary to repair/replace buildings and support industry, including equipment and machinery, are often manufactured in whole or in part overseas. In the event limitations are set on the import of materials, or if manufacturing and supply facilities are closed for a period of time, a ripple effect occurs, impacting the availability of materials and items which then can have an adverse effect on many businesses. This situation can also happen in the event domestic facilities suffer similar shutdowns.

4. Ingress/Egress – Civil Authority

As shutdowns and gatherings become more and more restricted across the country, with no known end date, access to businesses, and the ability to have people continue to work together in close quarters can have an effect on a business’ production or ability to remain open.

5. Increased Cost of Employees Working Remotely

As much of the U.S. service-oriented workforce is moving to remote working conditions, this shift in worker location can cause productivity issues as well as result in additional cost. Costs may include a variety of one-time technology expenses, abnormal fees from the usage of personal cell phones, and/or the purchase and usage of additional company cell phones, and home office supplies. This potential increase, along with a decrease in production from a lack of integrated collaboration for businesses that normally rely on their teams being centralized impacts utilization, revenue, and earnings.

6. Idle or Reduced Production (Production Restart)

As plants and factories are either fully or partially shut down, or as the manufacturing workforce is reduced to allow for social distancing, production can be significantly impacted. Further, a complete shutdown of a plant or facility can include increased cost for startup and re-certification of a plant, facility, or assembly line. Regular or increased cleaning and decontamination to keep a facility open with a full or reduced workforce can also add significant cost for a business.

7. The Role of the Expert

Understanding the myriad of effects on different aspects of a business in the current environment is key to identifying the various issues which can exist. Obviously, coverage decisions will need to be clearly determined so as to allow experts to measure the covered impact.

To fully account for all potential adverse outcomes on the business, consideration must be given to each of the potential issues noted above. It is vital to rely on experts who have the knowledge and ability to determine the various potential issues that can disrupt a business under any emergency scenario.


In summary, understanding the issues at hand and having the right team of experts working in concert will allow for a fair and accurate analysis based on the current business environment.

About J.S. Held

J.S. Held is the world’s leading multi-disciplinary expert services firm specializing in all aspects from property damage, to environmental issues, forensic accounting & economics, equipment and production lines, and more. J.S. Held experts were leaders on some of the most complex claims in history, including 9/11, hurricanes, and wildfires, and have extensive experience understanding and accounting for extraordinary post-catastrophe circumstances. Our experts work seamlessly together to provide the highest quality verifiable and supported conclusion on the most complex assignments.

For more information, visit our website at, or contact any of our practice leads listed below:


[1] J.S. Held does not provide adjusting or insurance coverage consulting. The issues presented herein are for informational purposes only and included in an attempt to cover the complete landscape based on our experience.

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This publication is for educational and general information purposes only. It may contain errors and is provided as is. It is not intended as specific advice, legal, or otherwise. Opinions and views are not necessarily those of J.S. Held or its affiliates and it should not be presumed that J.S. Held subscribes to any particular method, interpretation, or analysis merely because it appears in this publication. We disclaim any representation and/or warranty regarding the accuracy, timeliness, quality, or applicability of any of the contents. You should not act, or fail to act, in reliance on this publication and we disclaim all liability in respect to such actions or failure to act. We assume no responsibility for information contained in this publication and disclaim all liability and damages in respect to such information. This publication is not a substitute for competent legal advice. The content herein may be updated or otherwise modified without notice.

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