Tornado — Rail & Transportation Equipment Manufacturer
A tornado struck a rail and transportation equipment manufacturer, a subsidiary of a diversified global industrial holding company, damaging its facility and disrupting both its equipment and aftermarket businesses.
The professionals of RT Forensic Accountants were engaged to prepare the property damage, business interruption and extra expense claim, a loss exceeding $6 million.
- Industry
- Rail and transportation equipment manufacturing
- Peril
- Tornado
- Coverage
- Property damage, business interruption and extra expense
- Result
- Loss exceeding $6 million, with business interruption largely mitigated through extra expense
The Loss
The tornado damaged the facility and interrupted two different revenue streams: equipment sales, which could largely be made up once production resumed, and aftermarket parts and service revenue, which could not. The company moved quickly to keep operating by renting storage space and bringing in office trailers.
The Process
We gathered the company’s loss accounting ledger and aligned each cost incurred with the appropriate head of claim under its property policy. We also agreed with the adjustment team on a dollar threshold for the supporting documentation needed to substantiate the claimed costs. For business interruption, we separated equipment sales recovered after the event from permanently lost aftermarket revenue, measuring each on its own terms.
The Results
A loss exceeding $6 million was presented to and agreed with insurers. Because the company largely mitigated its business interruption through incremental expenses, much of the claim was recovered as property damage and extra expense, with some business interruption measured through the lost aftermarket revenue.