Can insurers consider donations as business income in the event of a claim?

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A GoFundMe has raised $30,000 for an insured gym after a fire. (Photo: smile23/Adobe Stock)

Every claim is different and some insurance policies can be difficult to interpret in particular situations. FC&S Expert Cover Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it easy to find credible answers to your complex coverage questions. Analysis presented by our FC&S experts.

Editor’s note: In our question this week, an insurer says donations should make up for a gym’s lost business revenue.

Question: Our client is a gym that experienced a fire on January 1st. Friends and clients started a GoFundMe that raised $30,000 in January. The insured was able to move down the street to a temporary space. Moving and interim costs are considered additional expenses but must still be paid by the insurer.

Insurance company accountant wants to use GoFundMe donations to make up for lost revenue. We said that donations were not business income and that donations were used to pay for uninsured losses. (The business was insured for $90,000 and the loss was $130,000.)

Is the accountant’s logic correct? For example: if we give a pot to a neighbor who had a cooking fire, should this be deducted from the food loss of his insurance claim?

— Subscriber from Pennsylvania

To analyse: GoFundMe accounts can generate many donations for a business after a disaster, especially a customer-favorite business. But should these donations be considered business income when filing a claim?

Responnse: For the answer to this week’s Q&A, please log in to your FC&S Expert Cover Interpretation Account.

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