Business Interruption Insurance – Is my business covered?

With the effects of the novel coronavirus still rippling across the country, many business owners are searching for any and every way to ensure that their business will survive. One area where many business owners are looking for answers is in the realm of business interruption insurance. While the interruptions related to the coronavirus are at the forefront of everyone’s mind, this type of coverage can protect you and your business in the future as well so knowing your options will remain valuable.

The first question for each business owner to ask themselves is whether their business already pays for business interruption coverage as part of their current, in-force policies. This question can be resolved with a quick call to your insurance agent. Even if you believe that you do not have coverage, it is worthwhile to call your agent. As we all know, it is better to be safe than sorry. Additionally, if you do not have coverage now, it would be a good time to again consider whether business interruption coverage is right for your business.

The next question you need to ask is whether the interruption your business is wanting to insure against qualifies for coverage under the policy. With respect to the coronavirus, this question will likely be framed as whether a global pandemic or government required shutdowns will qualify. In order to make this determination, you need to look at the specific language included within the policy as no two policies are the same. Business interruption insurance policies may focus on whether there was “physical damage to the property”. Some business interruption coverage policies may include a specific civil authority coverage provision. Conversely, many policies may have a long list of exclusions to coverage, many of which include interruptions arising from a virus or bacteria, as well as the enforcement of an ordinance or law.

With that being said, not all hope is lost. While the burden is on the insured to prove that they have a claim under their policy, there are still arguments which can be made in an effort to obtain coverage. During the coronavirus pandemic, it is important to look specifically to the various executive orders issued by your state’s governor, as well as any city or county executive orders issued. The language of these orders could provide you with the ammunition you need to make a claim.

What does all of this mean? File a claim now. While obtaining coverage may seem like an uphill battle, it is definitely a battle worth fighting. Many claims will be denied, but that should not scare you out of filling a claim. As we have seen elsewhere during the pandemic, such as with the Paycheck Protection Program (PPP), timing can be everything. It is smart for your business to be in the front of the line and being proactive.

If your claim is denied, you still have options. After all avenues with your insurance company are exhausted, you may file a Petition for Declaration of Rights in the court system. This petition is a request to the court system to make a determination that you should be provided coverage based on the terms of your policy. One of the arguments which will likely be made in front of the court is that a pandemic of this level cannot be construed to be within the exclusions of the policy and therefore you should be covered.

Sadly, there is no way to predict how long this pandemic will last or what the lasting effects will be. Similarly, there will be additional business interruptions in the years to come totally unrelated to the Coronavirus

This article provides only a brief overview of the issues your business may face in regard to business interruption coverage. If you have any further questions regarding this issue, or any business law issues ranging from the organization of your business to business litigation, and would like to further discuss these issues, please contact Alex Blackwell at 270-450-8253.