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Deciphering Ordinary Payroll: A Critical Element in Business Income Claims

By February 12th, 2024No Comments


Ordinary payroll often becomes a focal point in business income coverage, especially after a property loss event. The complexities surrounding ordinary payroll coverage can significantly impact the outcome of a business income claim. Let’s explore these intricacies and how United Public Adjusters & Appraisers, Inc. confronts these challenges when representing hotel and restaurant owners against insurance company accountants.

Understanding Ordinary Payroll in Business Income Coverage

When a business suffers a property loss, labor costs, including ordinary payroll, come under scrutiny in the claim process. Here’s a closer look at the key aspects:

  • Definition and Coverage Limitations: Ordinary payroll typically refers to wages for non-key employees. However, the exact definition can vary. Some policies may exclude or limit ordinary payroll coverage, creating a need for careful analysis.
  • Key Considerations in Ordinary Payroll Coverage:
  • Scope of Coverage: Deciding whether to insure all labor or limit ordinary payroll coverage is a critical business decision. Factors like the disaster recovery plan’s effectiveness, premium costs, and risk exposure influence this decision.
  • Partial Operations vs. Complete Suspension: Insurance policies often assume a total shutdown post-event. Yet, partial suspensions raise questions about the efficiency and contribution of continuing payroll towards revenue generation.
  • Layoffs, Vacation, and Severance: These factors add complexity to the claim. For example, does the policy cover vacation pay as a continuing expense if paid during the restoration period?
  • Challenges in Claim Processing:
  • Employee Classification: Determining which employees fall under ‘ordinary payroll’ and identifying key employees who don’t always have specific titles can be contentious.
  • Extra Expenses and Efficiency: Continuing ordinary payroll beyond limited coverage can be pursued as extra expense or as a measure to reduce overall loss.
  • Post-Loss Labor-Related Costs: Layoffs may lead to increased unemployment insurance, recruitment costs, and other expenses that impact the claim.

United Public Adjusters & Appraisers, Inc.’s Approach:

Our experienced team excels in handling these complexities by:

  • In-depth Policy Review: We analyze the specific language and coverage limits pertaining to ordinary payroll.
  • Strategic Claim Management: We consider all aspects of payroll, including labor burden, post-loss expenses, and labor market challenges.
  • Expert Negotiation: Our in-house CPAs and adjusters are adept at presenting a well-substantiated claim, considering every nuance of the ordinary payroll coverage.


The intricacies of ordinary payroll in business income coverage require expert navigation to ensure fair and comprehensive claim settlement. At United Public Adjusters & Appraisers, Inc., we bring our specialized knowledge and experience to the forefront, ensuring that every aspect of your claim, including ordinary payroll, is meticulously addressed.

Facing a Business Income Claim?

Contact United Public Adjusters & Appraisers, Inc. for expert guidance and advocacy in your claim process.

  • Phone: 1-800-718-5677 (LOSS)
  • Email:
  • Website:


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