Business Interruption Insurance

Business interruption insurance compensates the policy holder for lost business income if the policyholder’s company had to vacate the premises or close its doors due to disaster-related damage that is covered under the policy. In other words, this insurance covers the revenue you would have earned, based on your financial records, had the disaster not occurred This may include casualties such as fires, hurricane, etc.

In the wake of business closures due to the Coronavirus (COVID-19) pandemic, many businesses will be filing claims, and will find themselves on the receiving end of denial letters and big surprises. 

We anticipate the insurance companies may raise any or all of the three defenses to coverage: 

1. Unbeknownst to many business owners purchasing these policies, since the SARS epidemic in 2003, big insurance companies began writing exclusions into their policies for loss of business income due to viruses, bacteria and pandemic outbreaks. 

2. Insurance companies may also take the position that there has to a direct physical loss in order for the claim to be approved, and that since the business losses created Covid-19 is almost all economic, the economic or monetary loss is not the result of a direct physical loss.

3. Finally, they may argue that local orders because of the concern of the coronavirus are not sufficient to trigger coverage under the policy.

A prominent policyholder advocates attorney recently and proactively (even before an insurance claim was filed) initiated the first lawsuit in the nation on behalf of a New Orleans French Quarter restaurant, seeking a declaratory judgment requiring that the insurance carrier be forced to pay for losses caused by the pandemic. He has argued that the coronavirus can stay on surfaces and substances for many days, thus affecting the property and causing property damage. This is a novel argument, and it remains to be seen what effect it will have. 

If you have business interruption insurance, you need to:

1. Obtain a copy of your policy.

2. Start pulling your financials to support your claim.

3. Submit your claim.

4. Immediately retain a business interruption insurance coverage attorney if you receive a denial letter.

Time is of the essence for the survival of your business. Please do not hesitate to contact the knowledgeable attorneys at Trembly Law Firm to help you guide your business through this tumultuous time and help you develop a plan to improve the chances of survival of your business and avoidance of lawsuits in the future.

Trembly Law