What Exactly Is Considered A Large Loss?

Storm Damage & CAT Restoration
Author: Bridgette Smith

For the most part, large loss is exactly what it sounds like - it’s any situation where there’s been a significant amount of damage. Large loss refers to any situation in which the entirety of a property – whether residential or commercial, such as an office building, condo building, or warehouse - is destroyed, along with its assets and/or inventory. A large loss involves damage to property, which usually requires complex repairs to restore the structure to its original state. When the damage to the structure or contents in considered to be extensive – there is a chance it will be considered a large loss. In addition, a large part of business operations is halted due to the damages sustained, making expediting the restoration process critical for the survival of the business. According to FEMA, 40 percent of businesses do not reopen following a disaster and another 25 percent fail within one year of the incident. 

However, determining whether damage constitutes being classified as a large loss or not isn’t just dependent on the amount of money involved, it varies per situation. A large loss is not solely determined on the actual dollar amount of the damage to the structure and contents. Unfortunately, there is no set of rules that determine what exactly constitutes a large loss, but several factors aid with determining. These circumstances can include:

  • A significant area or portion of the structure has been affected
  • The majority of the structure needs to be replaced
  • A large part of the business will be paused until damage is repaired
  • Damage results in a very complex set of repairs in order to restore things to their original state

Large loss insurance claims implicate policy limits. These claims typically involve multiple parties, complex legal issues, tens of thousands of discovery documents and a multi-year litigation trajectory. While commercial claims may be hundreds to thousands of dollars, large loss claims exceed that. For some, amounts can hit six digits to even millions. Due to the extent of the damage, the claims become more complex than routine ones. More will need to be investigated and reviewed for an accurate and fair outcome. Also, because of the amount of money at stake, attorneys may be involved.

Being Prepared For a Large Loss

When it comes to keeping your commercial property safe, the best defense is a good offense. When a disaster strikes or natural events such as hurricanes, earthquakes, floods, or fires affect your business, you must be prepared. For starters, you should learn what is and what isn’t covered by your insurance policy. Also, a trusted and experienced restoration partner is important and can make the process much simpler during such a difficult time.

At ServiceMaster Recovery Management (SRM), we believe that effective preparation is the best way to help minimize the extent of damages when disasters strike. That’s why we offer the industry’s only Pre-Disaster Program. Our Pre-Disaster Program provides unrivaled value to our commercial clients before, during, and after a property loss. We tailor our recovery solutions to the unique needs of each property, and we focus on developing plans that help to minimize risk, limit claim severity, and significantly reduce the interruption to your business. SRM believes in investing in the future and has the people, technology, resources, and systems to deliver the most unique program of its kind.

Clear, Concise & Transparent Communication With SRM

Large loss restoration projects are highly complex and involve many components and moving parts. From scheduling to equipment, personnel management to site logistics, each aspect needs to be managed correctly as well as documented properly and communicated in an effective manner. Proper, effective communication is the only way to eliminate confusion for all parties. SRM has developed the most sophisticated yet simple communication methods to ensure everyone involved in the restoration is kept up to date and properly informed. This communication eliminates confusion by providing timely information on all aspects of the project. Every aspect of your restoration is well documented and clearly communicated to all stakeholders continuously. In addition, our standardized reporting means you receive the exact same information in the same format no matter how many properties you have. Each and every project follows the same protocols and procedures. This standardized approach saves you time and further eliminates confusion.

Eliminate confusion and save time with the best large loss reporting available. At ServiceMaster Recovery Management (SRM), we understand having the equipment and capabilities to complete a job is only part of what it takes for a successful commercial restoration. We know success depends on clear, concise communication from the very beginning of the project to the final invoice and completion of the job. For this reason, we have dedicated extensive time and resources to developing the best project communication and large loss reporting available. From customized client portals, which include all relevant documents and information, to project documentation and daily project manager reports, every aspect of our large loss reporting has been designed to eliminate confusion, save clients time, and minimize potential discrepancies. The result of our dedication is the most effective large loss reporting in the industry.