Businesses, small and big, are experiencing monolithic losses because of the COVID-19 crisis that’s triggered a government shutdown. Business owners are not just suffering from closure; those that are still open continue to experience considerable reductions in revenue and employee staffing. We expect the economy to reopen, but even when this happens, most businesses may take longer to recover or not recover at all.
Most business owners have approached insurance companies to seek recovery from the coronavirus-related losses, which typically fall under business interruption insurance. Business interruption insurance is aimed at covering a company’s losses when a natural disaster, fire, or other event disrupts its operations. But, most insurance companies are denying valid claims on the basis that the coronavirus has not resulted in physical damage or because relevant policies have exclusions for viruses, pandemics, and epidemics.
If any insurance company has denied you compensation for business interruption resulting from COVID-19, then read on. Your insurer may have made you believe that your current policy doesn’t cover business interruption. But don’t be quick to accept such a blanket statement before finding an answer to the question:
There’s a difference between business interruption insurance and property insurance, which typically covers any physical damages to business premises from a disaster, such as an earthquake, flood, or fire. But, did you know that your commercial property insurance may still cover COVID-19 losses, even if you haven’t purchased a particular business interruption plan?
To establish if your insurance includes business interruption, go through the declaration page of your policy that summarizes the terms and coverage of your policy. If you come across the following terms and are facing coronavirus-related business losses, you may be eligible for business compensation even if your insurer denied the claim:
Business Disruption or Business Interruption coverage – usually aims at recovering your lost profits due to a disaster.
Extra Expense coverage – typically pays costs for resuming operations after losses. The costs may include expenses, such as rent, salaries, and more.
Contingent Business Interruption – covers for losses resulting from damage or lack of access to suppliers of materials or other items critical to the business.
Restricted or Lost Access – covers any losses resulting from the inability to leave or enter your property, such as a government order to stay at home.
Civil Authority coverage – usually pays for any losses resulting from closures mandated by the government.
All Risk, Special Perils, Open Perils – pays for a loss emanating from a non-purposeful cause other than the expressly excluded ones.
If, after reading your insurance policy, you still aren’t sure whether you qualify for business interruption insurance, don’t worry. Insurance companies write these policies in legal terminology to confuse non-lawyers.
At Fetterman & Associates, we offer a free consultation, which involves looking at your policy to let you know whether your insurance provider is honest regarding your coverage.
What the policy covers is dependent on the terms of the agreement between your business and the insurer. Here are the categories that business interruption insurance usually covers:
You may approach your insurance provider directly to submit a claim without involving a lawyer. If you choose this path, watch your language while making a claim. Instead of mentioning a specific reason, you may want to file the claim under “all terms of coverage.”
The downside of stating a particular reason in the claim is that, later, you may be limited to that reason rather than all the possible grounds for coverage. Besides, most policies have certain conditions preceding them. It’s the requirement that you should submit specific documentation and information along with the claim.
Even after confirming your eligibility for business interruption coverage, you may still encounter some hurdles when attempting to get compensation. A common challenge is the policy language, which limits the coverage to those losses that result from “direct physical damage to property or physical loss of property.” Insurance companies may argue that coronavirus-related business closure doesn’t meet the requirements.
Since the 2003 outbreak of SARS, specific insurance policies exclude any damages resulting from microorganisms. Other policies, on the other hand, only exclude damages associated with bacteria rather than a virus. The terminology used in these policies makes it necessary to consult an attorney who can review the policy along with the relevant law for interpreting it.
The fact is the losses caused by COVID-19 to the U.S. businesses will be monumental, and most insurance companies will give all kinds of excuses to dodge covering these losses. When organizations purchase business interruption coverage, they expect to receive protection if their normal operations halt. Your business deserves competent attorneys who’ll fight for your rights to ensure that insurance companies keep the end of their bargain.
If your company has sustained losses resulting from the coronavirus pandemic and your insurance provider has denied your business interruption claim, then Fetterman & Associates can assist. Call our North Palm Beach office at 561-983-4771 or our Port St. Lucie office at 772-344-5515 for a free consultation.
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