Business Interruption Insurance: What is it and does it cover the coronavirus?

Business interruption insurance is insurance coverage which is purchased by a company in case of a disaster which prevents that business from operating as it usually would, under ideal conditions. If a company is forced to shut down because of certain perils, this insurance will kick in and cover that company so that they are not forced to go out of business due to the lost revenue. This blog will talk about business interruption insurance, what it is, and whether or not it will step in and cover a company because of the coronavirus pandemic.

What is business interruption insurance and what does it cover?

As stated above, this is insurance which is purchased to cover a business in case a peril or loss occurred. The business interruption insurance will step in and pay for a company’s bills and lost revenue during this period to ensure that the business can remain active. As you can imagine, any business that suffers a peril and does not have this insurance runs the risk of not being able to remain in business if no money is coming in. Th most covered perils include fire and storm related damage. It is important to check your policy and read the specific language to know what exactly is covered and what is not. Also, if you are forced to relocate because of the peril, business interruption insurance may also be able to assist with any relocation costs. It is important to remember that business interruption insurance only covers financial losses, not the actual physical damage to the property.

When purchasing a business interruption insurance policy, you want to make sure that you secure policy limits on your policy that are high enough to cover your business for more than a few days. Sometimes, if it is a major disaster, a small business can be out of business for weeks or even months. Always make sure that your policy limits are large enough to take care of you in case the closure goes on for an extended period of time.

Does business interruption insurance cover COVID-19?

Everyone knows that COVID-19 is wreaking havoc on our economy, especially on small businesses. Many small businesses around the country who have purchased business interruption insurance are now wondering whether or not their policy will cover them because of the required shutdowns from COVID-19? The answer to that question largely depends on the language in the policy, and unfortunately most are finding that their claims are being denied by insurance companies as not a covered peril. The problem is, most of the insured individuals who purchased their business interruption insurance assumed that they would be covered. Now small businesses, especially in the hospitality industry, are coming to the realization that they are not going to recoup their lost revenues. Many of these small business owners are now hiring attorneys to go after the insurance industry to make COVID-19 a covered peril under the policy. The response by the insurance industry, as you can imagine, has been less than receptive. Insurance companies are telling their insured that they will not cover these losses, and they will not rewrite the existing policies to include COVID-19 as a covered peril.

So, what should you do if you feel as though your insurance company is wrongly denying your claim?

If you purchased business interruption insurance for your small business and are now being told by the insurance company that it does not apply to the covid-19 pandemic, you should consult with an attorney who may be able to assist you. An attorney will be able to review your policy and let you know whether you potentially have a claim based on the language in your specific insurance policy. The attorneys at the Lopez Law Group will be able to assist you immediately. Please give us a call at 727-933-0015 to discuss your specific case. Our attorneys are waiting to assist you!