There a number of different types of economic damages that arise in business interruption cases. One type of damage is the lost profits associated with the business interruption. Another type has to do with the loss of asset and/or property values. Out-of-pocket expenses associated with the incident that caused the business interruption is another common loss in business litigation.

The example below involves business interruption litigation involving a midsize cattle operation. The impacted cattle operation is is based on an 1000 acre ranch in Central Texas. The cattle company earned its revenue from the sell of registered cows and calves, commercial steers, hay and other agricultural products related to cattle production.
The company’s the ranch operation was damaged by a welding fire that was sparked in the main section of the property. The fire caused a number of buildings to be damaged. Several livestock areas suffered damage that resulted in the death of livestock and the damage and destruction of machinery and equipment.
The company had business interruption insurance. The company’s insurance policy worked off a formula that reimbursed the company for a set period of lost profits, out-of-pocket expenses, and expenses to get the business back to where it was prior to the incident.

After the fire the ranch management filed a claim with the insurance company. The insurance company did their analysis and reimbursed them for their losses according to the policy. The ranch owners did not agree with the amount that was paid by the insurance company. The ranch owners calculated that they were both out of pocket a lot more than the insurance company calculated and their lost profits were higher. The ranch also calculated that it would take a longer period of time for them to be able to get back up to speed.
Ultimately after several year months of dealing with insurance company the ranch owners suit the insurance company and other parties including the company that started the fire. In this case the ranch alleges that several types of economic loss associated with the business interruption have occurred.

The ranch first alleges incurred out-of-pocket us expenses associated with the cleanup of the damage and destruction of its property and assets. In this case these expenses include removing machinery replacing machinery and disposing of livestock. In addition the company has also incurred a loss associated with the amount that will be required to get the company back to where it was before the fire. In this instance, these expenses include fixing and replacing the machinery fixing and replacing buildings and purchasing new livestock. In addition to the out-of-pocket expenses associated with the remediation of the damage and the purchase of new equipment and livestock, the business operation has also alleges lost profits during in the time period in which they were the remediation occurred. In this instance the company lost out on calf sales, hay, and other agricultural products that were damaged or destroyed from the fire. The ranch operation also was not able to conduct its auction of its crop because of the fire.