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COVID-19 and Business Interruption Insurance: What You Need to Know

The novel coronavirus, also known as COVID-19, has caused a major disruption to the U.S. economy. The global pandemic has quickly placed many small businesses in jeopardy as the government continues to shutter establishments in an effort to “flatten the curve.”

How can a business potentially mitigate or combat losses associated with COVID-19? What do you need to know before filing for business damage interruption claims?

During these difficult times, business owners can check their insurance policies (specifically the portion on business interruption insurance) for possible coverage for loss of income.

Defining Business Interruption Insurance

This form of coverage helps replace lost income and pay for additional expenses when a covered peril affects a business.

A few examples that fall under “covered peril” are lightning, fire, and theft. If a fire, for instance, breaks out and damages company property, business interruption coverage may reimburse the insurance policyholder for extra expenses (if temporary relocation is needed) and lost income (from the destroyed goods).

COVID-19: A Covered Cause of Loss?

The language of the policy will govern whether business interruption losses are covered by the coronavirus. If the policy provides coverage for loss of use of premises, or for orders from civil authorities, that supports an argument for coverage. Exclusions for losses caused by virus, on the other hand, may present an obstacle to coverage.

Policies that provide broad coverage will help support a coverage claim. For instance, an “all-risk” policy provides coverage for all risks of loss unless specifically excluded.  Another example of a favorable policy is business interruption insurance policy that includes “communicable disease” as one of the covered losses. The insurance coverage that applies in cases, such as the novel coronavirus, may include:

  • The losses of a company due to proximity if a civil authority closure of an adjacent establishment prevent customers from entering
  • Businesses unable to operate because of a breakdown in the supply chain
  • The cost associated with contamination from customers
  • The cost of cleaning and sanitizing the facility or business premises
  • Losses from the inability to use business premises

If such coverage is in the contract, the coverage amount may be limited.

Reminders When Filing a Business Interruption Insurance Claim

Submitting a claim requires careful preparation. Before you file, make sure to:

  • Get a copy of your insurance declaration and policy
  • Document your losses to help you substantiate how COVID-19 has negatively affected your business
  • Maintain accurate business record to help you support your claims
  • Review your insurance policy with the help of a legal counsel

Once the insurance company receives your claim, they are required to investigate it fairly.  Ricardo Lara, the insurance commissioner of California Department of Insurance, stated in a press release that policyholders deserve the benefits, coverage, and benefits that are due to their insurance policy.

We Make Sure Your Insurance Provider Treats You Fairly

Even if your insurance policy does cover losses caused by COVID-19, there’s no guarantee your insurance provider will honor it or approve a qualified claim. If you want your claim to have a high chance of success, you’ll need an attorney by your side.

Haffner Law has lawyers who have helped clients obtain fair compensation in a wide range of situations, including wrongful death, car accidents, insurance bad faith, and business claims. We’ll help you obtain the compensation you deserve under the insurer’s policy.

Our law office is available to provide legal assistance during these trying times. Schedule a consultation by calling 1-844-HAFFNER or (213) 514-5681.

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