The novel coronavirus quickly changed the world as we know it and businesses are no exception. From dealing with government shutdowns to learning how to safely decontaminate premises, business owners who have done everything right are facing uncertainty that is totally out of their control. Many business owners are wondering whether their business interruption insurance policy will provide coverage for the losses suffered during this time. Here’s what you need to understand about business interruption (“BI”) insurance and whether you might have a claim.
What is business interruption insurance?
Business interruption insurance provides coverage for a business’s short-term financial losses when something negatively impacts normal business operations. However, like most insurance policies, BI policy provision can be worded very differently and each policy must be carefully examined to determine whether there will be coverage. The coverage provided by a business interruption policy can be used for lost income, to pay bills, and to cover necessary expenses such as payroll.
Many types of businesses have purchased these policies and are wondering about their ability to make a claim due to the pandemic, including restaurants, building owners, healthcare centers, landlords, retail stores, office buildings, and more. While most business owners are considering their business interruption coverage due to COVID 19, business interruption insurance also covers lost business income due to other causes so it is always helpful to speak with an attorney and understand your policy if your business has experienced a loss.
What does business interruption insurance cover?
Almost all business interruption insurance policies will only provide coverage for financial loss if it is caused by a covered peril. This is where COVID 19 makes things more complicated for business owners as it is not entirely clear whether COVID 19 will be considered a covered peril. That being said, business owners have suffered financial loss not only from the pandemic, but also due to mandatory government shutdowns that lasted longer in some areas than others, or due to actual exposure or contamination that occurs on the premise. These sample business interruption claims are just a few examples of the types of loss business owners are facing.
How are Business Interruption Insurance Policies Limited?
Many BI policies also offer policy extensions. These extensions may provide coverage for a business after it is repaired but before it is as profitable as it was prior to the loss. Similarly, another extension can provide coverage when a supplier or customer suffers damage that then impacts the business.
The first thing any business owner should do is pull out his or her business interruption policy and read the provisions. Some policies limit coverage to the indemnity period, which can be as short as a few months. Other policies establish a “sum insured,” which is the maximum amount of coverage offered under the business interruption policy. Additionally, every policy contains many other exclusions and definitions that will be relevant to understanding your coverage. Because these policies are so complex and COVID-19 is a new type of business loss, an experienced business interruption insurance lawyer can help you evaluate your claim.
How are business interruption insurance claims calculated?
While every policy is different, speaking generally a business interruption claim will be calculated by adding up:
- Lost profit caused by the covered peril,
- Additional expenses associated with the loss,
- Reasonable expenses preparing the claim, such as accounting.
Then, an adjuster will subtract any savings associated with the loss, such as food that a restaurant didn’t order while it was closed. This final number will be the amount of the business interruption claim.
What information do I need to make a business interruption claim?
If you are making a business interruption claim, you need to provide all the information necessary for an adjuster to evaluate and calculate your claim. This means you should gather:
- A copy of your business interruption insurance policy
- The dates your business was impacted and/or shut down
- The reasons your business was impacted and/or shut down
- Evidence that your business was contaminated by COVID-19 if you had to decontaminate
- Any additional expenses you’ve incurred, such as cleaning equipment
- Profit and loss statements, payroll, other financial information.
Can the business interruption insurance attorneys at Morris Bart, LLC help me?
Whether your claim has already been denied or you are looking to prepare your claim to submit to the insurance company for coverage, a business interruption claim attorney can help you understand your rights and present your evidence in the way that will help you the most. If your business suffered a loss, contact us for a free case evaluation. We will work with you on a contingency-fee basis to gather this evidence and prove your case. Fill out our free case evaluation form to see if you are eligible for a claim. An business interruption insurance attorney at Morris Bart will assist you in the evaluation process. Initial consultations are FREE. We have office locations throughout Louisiana, Mississippi, Alabama, and Arkansas. Call us at 1-800-537-8185 today.