What is Actual Loss Sustained?

There’s a lot of complicated and confusing jargon in the insurance business. Having a local independent insurance agent by your side can help clarify things. Reading about insurance words online (for example, in the Mutual Understanding blog) is another way to get more understanding of what something means.

Here’s a common term in insurance: actual loss sustained (ALS). Our Businessowners coverage automatically includes “Business Income and Extra Expense – actual loss sustained.”

As the name suggests, the coverage pays for the actual dollar amount that’s affected by a covered loss. It’s not just physical loss, either. If a windstorm tears through your business and forces you to shut down for a few weeks, your policy will cover building repairs, as well as profits you aren’t earning because your business has to be closed. It also includes ongoing expenses that don’t stop just because your work is on hold (rent, utility bills, salaries, taxes, etc.).

How is this amount determined? It takes experience on the part of the claim specialist examining a loss, a history of the company’s performance, conditions in the overall economy, and many more factors. Each situation is different, and there’s a good bit of research required before an amount is named. 

Keeping accurate records can help prove sales figures and reasonable forecasts for the future of the business. Having an estimate of the value of equipment and materials in the business is useful as well.

• How much would it cost to replace that piece of machinery that simply has to work or you can’t do your job?
• How long would it take to replace your stock of raw materials?
• How is your company doing in comparison to your competition? If you offer something unique, you may be in a better position than a business that merely offers the same products or services that many others in town offer.

The value of ALS in a claim isn’t always clear-cut, but if there’s a loss at your business, you will be glad you have Hastings Mutual Businessowners coverage, no matter how much it pays.