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The Effect of COVID-19 on Time Element Claims

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NOTE: This is part two of a series designed to present thoughtful topics that will affect insurance claims arising from the current pandemic.

Time element claims, including both business interruption and rental value loss, are typically measured from the date of physical damage sustained to a property until the date when the damaged or destroyed property should be put back into service. Insurance policies covering such economic damages will often state that the measurement of the time period used to indemnify a policyholder assumes that the work progresses with due diligence and dispatch. But what happens during a catastrophe, or as now, when a national emergency can change the time period?

While the entitlement to coverage during an extended time period is a legal matter, and will not be addressed in this paper, the potential causes of delays beyond the norm due to various impacts from the current situation are presented herein. Some of these delays are not related solely to the current global situation. Fortunately, there is good historical context to be able to predict many of the issues potentially affecting claims. Many of these issues were present after the 9/11 terrorist attack, major hurricanes, and the 2017 and 2018 California wildfires.

This paper seeks to address the major issues associated with time element claims.

1. The Basics

Physical damage from a loss event results in repair or replacement work that has to 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 a property damage loss, this period of disruption can result in a time element claim that has either business interruption (BI), rental loss, or extra expense (EE) implications. In a builder’s risk loss, the necessary property damage repairs may result in a project delay with BI, EE, rental loss, or expediting expense claims. Understanding the period of restoration and its potential delays and/or impacts is crucial to the evaluation of any claim. For further definition, a few key terms are as follows:

  • Period of Restoration: The time necessary to repair the insured property to its pre-loss condition, assuming the work is completed with due diligence and dispatch. This period typically runs from the date the loss occurs until the date that the property is (or could have been) returned to its pre-loss condition.
  • Period of Indemnity: The time period, typically prescribed in the policy, which is used to calculate the amount of loss payable to the policyholder.
  • Period of Delay/Period of Indemnity in Builder’s Risk: The time period that runs from the date a project would have been completed had no loss occurred, until the date that the project should have been completed as a result of the loss. In a builder’s risk loss, the period of restoration and period of delay/indemnity rarely run concurrently, and often do not represent the same length of time. This is because, unless the project is very close to completion at the time of the loss, both loss related repairs and project completion activities need to be accomplished post-loss, prior to completion.

2. The Potential Effect of a Pandemic

Many conditions, such as those that can be amplified by a pandemic can affect the start and the duration of the period of restoration. These conditions can also have an adverse effect on the period of delay and/or return to operations. It is important to note, however, that these issues have the potential to affect not only losses that occur during the period of emergency but may also adversely affect the time period for losses that have already occurred and for which repair work is currently underway. Some of the potential issues are as follows:

  • Transportation Shutdown – there are many ways which local, national, and international transportation disruption can affect the period of restoration. These include:
    1. Delayed receipt of material necessary to effectuate repairs
    2. Customs delays at ports and terminals
    3. Local transportation disruptions affecting the ability of labor to access the job site
    4. Extra expenses caused by any or all of the above
  • Law & Ordinance Issues
    1. Lack of available permit authority workforce to grant permits, make inspections, and provide necessary signoffs and/or other approvals
  • Site Availability Issues
    1. Shutdown of work by landlords or condo/cooperative regimes, delaying the start or progress of required repair work
    2. Localized emergency declarations affecting the ability to access project sites
  • Environmental Issues
    1. Potential requirements to make job sites safe for workers
    2. Potential requirements to make completed projects safe for occupancy
  • Labor/Workforce Availability
    1. Ability to find skilled workers can be affected by local market conditions, availability of skilled labor, and may result in increased wage scale costs
    2. Ability to fully staff crews, affecting productivity and labor efficiency
  • Labor Inefficiency/Consequential Effects
    1. Loss of momentum on existing projects leading to a lack of productivity and higher cost
    2. Loss of productivity to acceleration, trade stacking, re-sequencing, and other potential effects
  • Equipment Availability
    1. Lack of readily available equipment to perform necessary repair work

3. The Role of the Expert

Understanding the myriad of effects on repairs due to physical loss in the current environment is key to being able to identify the various issues which can extend the period of restoration. Obviously, coverage decisions will need to be clearly determined so as to allow experts to measure the covered period of delay.

To fully account for all potential adverse effects on the time to effect repairs, consideration must be given to all 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 project under any emergency scenario.


In summary, understanding the scope of repairs due to the loss event and the resultant period of restoration is critical to evaluating any loss. Having various experts working in concert to determine scope of loss, period of restoration, the effect of potential environmental impact on cost of repair and time, cost of acceleration, and other key elements that will affect indemnity is key to understanding the reasonable, necessary, and loss related time element.

About J.S. Held

J.S. Held is the world’s leading expert services firm specializing in the determination of damages, including construction scope of loss and cost, effect of law and ordinance, period of restoration, period of delay, equipment loss, environmental impact on cost and time, and economic loss. J.S. Held experts were leaders in the most complex 9/11, hurricane, and wildfire claims in history, and have extensive experience in 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:

A look back at the COVID-19 series:

View article one: "The Effect of COVID-19 on the Insurance Claims Market"

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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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