Business Interruption Insurance

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Let’s be frank, Coronavirus is going to cause a LOT of businesses a LOT of pain.

Those smart businesses that were paying for big premiums for business interruption or business loss insurance, for a crisis time just like this, need to know that they MUST hold their insurance company accountable.  Sadly, this obvious feat, will not be easy. The number of insured businesses who will be hiring lawyers because they are forced to fight to obtain the business interruption insurance they paid for is about to skyrocket.  Your business deserves to be able to count on that insurance.  Don’t be surprised if your insurance company fights you and doesn’t easily come to your rescue.

Business insurance is supposed to cover the losses caused by the coronavirus!  Most policies include business interruption coverage against physical loss of property caused fire, or another act of mother nature, and unless specifically excluded, that includes pandemics!  They may have some unique language that would include “act of god” or “terrorism” exclusion.  Because of the many rumors out there that China created this virus, it is possible for an Insurance Company to fight your rights based on their investigation into those issues. But that would be disingenuous.  Don’t let them play that game for a minute!

Your business interruption insurance was created to cover things like 1) Lost revenue, 2) Payroll, 3) Loan Repayments including your Mortgage or Rent and even many Lease payments 4) Due Taxes, 5) Payroll needs.  You will need to read your policy to know what coverages you actually purchased. If your company declines to properly cover the coronavirus and how it affected your business then you have a legal problem.

There is an interesting exception when the government shuts down your business.  There are a lot of business insurance policies that specifically exclude situations where a government shutdown occurs.  However, the language used by the government in the ordinance, statute, or other government order shutting you down could actually save you, depending on your policy language.

If any government entity shuts you down, even temporarily, the Insurance Company policy may also shut you down on getting your loss covered. READ the POLICY.  You can overcome this if any physical damage occurs directly to your property.  In this case, you may have some room to negotiate some coverage with the company.

What should you do now?

Here are your instructions:

  1. Get out your policy.
  2. Read it.
  3. No, I meant – “READ IT!” carefully.  The policy must be written in a language that is easy to read and understand.  Anything that is difficult to understand will be interpreted to your BENEFIT and against the Insurance Company.  Remember that!  Clear language is very important and has sunk many an insurance company trying to avoid paying out on a policy they wrote.
  4. While COVID-19 is a unique and interesting situation, we are confident your policy was written to cover just such an event.

If you DO NOT have business insurance, you will need to know ask if the company will cover it here forward.  Paying for a policy only to find out that the thing you were trying to avoid is excluded in the named exclusions in the policy is going to sting badly in your time of need.

However, (big but here) if such a closure occurs, as it now has in most U.S. communities, governments often offer relief programs. Concerning COVID-19, the federal government has passed protections to extend benefits to support employers faced with hard economic times and employees whose job security is now uncertain. Local, state and federal government agencies have released information about small business loans and disaster assistant loans that can help when disasters like these strike.

What is Contingent Business Interruption Insurance?

There is a separate issue called a “contingent business interruption” which is also covered in many business policies.  “Contingent” interruptions mean that your coverage protects against revenue-related losses by covering lost revenue as a result of a third-party shutdown such as a vendor or supplier.

How are business interruption insurance claims settled?

Most claims are negotiated, which is why an attorney experienced in the process is recommended.

What documents will I need for a claim?

An essential part of the process is documenting your case. Make sure to keep up-to-date financial records. A skilled business interruption attorney can help determine the value of your claim based on detailed profit and loss statements.

Keep in mind the following: (All policies have a definition section, read it, below are just general descriptions)

Actual loss sustained: Document how much of your business was affected.

Business income: Business income includes the net income that would have been earned or incurred and the continuing normal operating expenses, including payroll.

Period of restoration: Insurers are liable for the loss of business income only during the period of restoration, which is the length of time required to rebuild, repair, or replace a damaged or destroyed property.

Extra expense: These are expenses incurred by the insured during the period of restoration and because of it.

If I qualify for business interruption insurance, how much money do I get to claim?

The most common way is to use your gross earnings and projections to estimate future profits to determine your coverage.  Why create a situation where your coverage is less than the value of your business interruption costs.

For more Business Interruption Insurance Help, after you read your policy and get confused, scan or photo it and call me.  We will read the policy and try to explain it to you so you can make the claim without any lawyer involvement.  If that doesn’t work then come back, we will be here to help.  We are VERY CONFIDENT that we can do a FREE BUSINESS INTERRUPTION POLICY REVIEW for everyone and only those people who are in a real fight will need to litigate with us.  The number of businesses that will need to fight for their insurance benefits is STILL going to be more work than any firm can handle.

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