BP Claims: Business Calculations for the BP Settlement

  This report will inform you of the new BP Settlement system and how it will most likely be applied to your business. There are many changes from the GCCF system, we expect the Court Supervised BP Claims Process will be an improvement, but we do not preach its perfection. This report will discuss Final Payment Offers, the new calculations, the new Zone system and how to go about readying your business’s BP claim for the new process. The examples below are our best guesses with what we know of the new process.

If your business has filed BP claims and accepted the Final Payment Offer on its BP claims, your business is not entirely finished, yet. The Final Payment Offers were used to write off BP claims such as your business’s BP claim. The attorneys negotiating the settlement agreement have recognized this issue and are attempting to make BP re-process BP claims that have been concluded with a Final Payment Offer. On the other hand, BP claims that have accepted the Quick Payments, may not be as lucky. BP is attempting to hold out on Quick Payment BP claims, however, this organization will advocate for BP claims that have accepted the Quick Payments. If your business’s BP claim had accepted the Final Payment Offer, all amounts paid by BP will be deducted from the loss calculated under the new Court Supervised BP Claims Process, at least that is what we have been hearing.

BP Claims Settlement Calculations

This will bring us to how the calculations will be executed for your business’s BP claims under the new System. The Court Supervised BP Claims Process will apply a Risk Transfer Premium (RTP) similarly used in disastrous weather scenarios. Essentially, the calculation will most likely be on a one-tenth scale from 1.0 to 5.0 where your 2010 loss will be calculated, then multiplied by your assigned RTP. So, the calculation will look like:

2010 Loss X Your assigned RTP = Your Award Amount, or BP’s liability on your BP claim.

The multiplier value for your BP claim will depend on your locale to the Oil Spill, the relation your business has to the Gulf Resources of tourism and fishing. The further away your business is located from the Spill, and the less likely your business depends on tourism, the lower your multiplier.

When filing your BP claims, you should keep in mind that your business’s location matters. As previously mentioned, your multiplier will be affected by your distance from the soiled beaches and wetlands. So, a car dealership, for example, across the street from a previously soiled beach, will get a higher multiplier than a car dealership that is 2.0 miles from the soiled beach. Furthermore, a car dealership across the street from the beach will receive a lower multiplier than the hotel next to it because of the lack of traditional reliance upon tourism.

Keep in mind when you are preparing your BP claims, gross and net sales will not be the figure used to calculate losses. The Oil Pollution Act prevents this. The figure you should use is the gross profits figure for your BP claim. Gross profits equal net sales, less cost of goods/services. The new system will take your worst three Post-April 2010 months, average those months and apply that loss figure to May to December 2010 as your monthly loss. The monthly loss will be totaled, then the RTP will be applied. This information will aid you on your BP claim.

Now, onto locale for your BP claim, using the two aforementioned car dealerships as an example. The Court Supervised BP Claim Process has split the Gulf Region in three zones:

Zone A: Will be all those businesses with BP claims 1/2 mile, or less, away from the beaches from Galveston, TX to Key West, FL.
Zone B: Will be all those businesses GREATER than 1/2 mile from the beaches from Galveston, TX to Key West, FL.
Zone C: Will be all those businesses greater than 1.0 miles from the beaches from Galveston, TX to Key West, FL.

These are educated guesses of how the zones will work.

So, a car dealership with a BP claim in Zone A will be assigned a greater RTP than a car dealership in Zone B and a hotel with a BP claim in Zone A will receive a higher multiplier than the car dealership in Zone A, or B. You can see how the calculations will be correlated with business type and distance.

BP Claims Solutions for Business

You can see that the BP claims process is still complicated, however, you can see that it is more transparent than the GCCF system. If you have any questions, or need assistance in filing a BP claim, please do not hesitate to contact us at 1-800-BP-CLAIM or fill out the form to the right. Adjusters and consultants charge 15% and Attorneys charge from 20% to 33.3% to handle your BP Claims.