Quantifying COVID-19 Losses

Organizations have experienced adverse impacts of COVID-19 due to canceled contracts, government-ordered restrictions and closures, and more generally, decreased or non-existent customer demand. Recoverability of these losses through litigation, business interruption, other insurance coverage, government disaster recovery and other stimulus programs is dependent on the facts and circumstances. Therefore, organizations should review their insurance policies, contracts and/or government program requirements carefully with the assistance of legal counsel.

As of the time of this article, there is much debate on key issues, such as whether COVID-19 is a covered event under business interruption policies, how force majeure and other relevant contract provisions will be interpreted and whether there will be additional guidance from the government.

Regardless of where your organization or client currently stands in exploring the recovery of losses, now is the time to identify, collect and retain adequate records in order to prepare an accurate and complete quantification of losses and submission of claims at a future date. By identifying key documents, data and other information needed for the future, organizations can develop an efficient process for capturing this information on a contemporaneous basis rather than months or years later when the records may no longer exist, or memory of those records is absent.

We recommend establishing a system, either within your accounting system or offline, to track relevant expenses. Key correspondence, contracts and other documents should be identified, collected and retained while considering that the majority of correspondence will likely be through telephone, video conference and other means of electronic communication. Maintaining a timeline of significant events is also best practice.

To help you get started, our business interruption and commercial damages professionals have prepared the following checklist of key documents, data, and information you may consider beginning to collect today.

Accounting and Financial Records
  • General ledger/trial balances
  • Internal financial reports
  • Annual financial statements
  • Inventory ledgers
  • Payroll records
  • Production reports, budgets, forecasts and/or projections
  • Income, payroll, property and sales tax returns
Event/Loss Documentation
  • List of canceled orders, contracts and other lost business opportunities
  • Applicable correspondence, contracts and other supporting information for lost business
  • Schedule of extra expenses related to the interruption or mitigation of losses
  • Documentation of fixed expenses incurred, including any records supporting payments
  • Records associated with disposal of spoiled inventory
  • Details regarding extra or unusual health care costs incurred
  • Records of debt and interest incurred because of lower profitability
  • Timeline of significant events, including governmentmandated shutdowns, supply chain disruptions and critical discussions with stakeholders
  • Insurance policies, including any correspondence with, and notifications given to, insurers
  • Relevant government programs, including any applications and supporting information
  • Personnel calendars/time records during the interruption period
  • Local, state and federal orders and guidelines
  • A listing of steps the organization has taken to mitigate losses, including supporting information

The preceding guidance is general in nature and not intended to provide specific advice related to your unique circumstances.

For additional information, please contact your DHG engagement partner or reach out to us at info@dhg.com.


© Dixon Hughes Goodman LLP. All rights reserved.
DHG is registered in the U.S. Patent and Trademark Office to Dixon Hughes Goodman LLP.