Property Damage Business Interruption Manufacturing

Tornado — Vertically Integrated Manufacturer

An EF3 tornado tore through central Ohio and destroyed a fabrication plant that was a key part of a fully vertically integrated manufacturing company. By using existing temporary space and renting more, the company kept production going with only minimal disruption.

The professionals of RT Forensic Accountants were engaged to prepare and manage the property damage, inventory and business interruption claim.

At a Glance

Industry: Vertically integrated manufacturing
Peril: EF3 tornado
Coverage: Property damage, stock and business interruption
Result: Claim settled for $105 million, including a business interruption loss of more than $20 million

The Loss

The tornado scattered thousands of raw material and work-in-process parts over a wide area and left the plant’s equipment in question, with each piece either a total loss or potentially repairable. Long lead times on every finished good made the business interruption difficult to measure, even though the company had largely mitigated it.

The Process

We helped the insurer’s experts manage the various inventory lists and agree on a value for the lost and damaged inventory. Working with the insurer and the equipment manufacturers, we reached a conclusion on the disposition of each piece of equipment. For business interruption, we traced the sales cycle to show how lost units of production led directly to lost sales.

The Results

Despite the company’s mitigation through temporary facilities, overtime and other measures, we calculated a business interruption loss of more than $20 million. The overall claim settled for $105 million.