What is Business Interruption Insurance and does it cover the coronavirus?
Imagine for a minute that you have a small business which has been profitable for many years. Suddenly, and without warning, a fire destroys the building and operations have to halt until the company is able to get back up on its feet again. This has happened to numerous businesses over the years. Most of the time small businesses are not able to survive such a disaster. The business closes for weeks or even months and sales plummet. But what if there was an insurance policy available to help in the event something like this happened? That is where business interruption insurance comes into play. In this article the personal injury attorneys at Dolman Law Group will discuss business interruption insurance in great detail, including what it is, how it works, and whether or not it applies to the most recent coronavirus situation.
What is Business Interruption Insurance?
Business interruption insurance is coverage that a business purchases to reimburse that company for lost income as the result of disaster related damage. This damage is usually associated with disaster such as storm damage, fire damage, wind and even theft. So, when a disaster occurs, the business is forced to shut down, this insurance coverage would step in and covers the revenue that the business would have earned over the time of the closure. Business interruption insurance not only covers revenue, but also will step in and cover other expenses while the business is closed, such as bills and related expenses. An example of everything business interruption insurance can cover includes the following: lost revenue, rent or lease payments, relocation costs, employee wages, taxes and loan payments.
It is important to make sure when you are purchasing this sort of coverage that your policy will cover the business for an extended period of time. Having a policy in place that will only provide assistance for a few days is usually insufficient. In a disaster related situation, a business could be interrupted for weeks or even months before returning to work as usual. You want the policy to cover you for the entire period so that you are not left footing the bill for a majority of the closure period. You should be prepared to calculate profits for an extended period of time, even up to 24 months, as it could take that amount of time to get your business up and running. Remember to factor in the following: anticipated growth, any costs associated with relocation of the business, the costs that will be associated with doing business from a new location, any fees associated with the new location and the salaries of those employees who won’t be working during this period. The usual cost for business interruption insurance is about $1,200 annually, or once a year.
What is covered under business interruption insurance?
An insurance company will pay for the actual physical damage or loss sustained. Meaning the insurer has to pay the insured if the business actually was forced to close and suffered a loss as a result. The insurer will also have to pay for lost business income, meaning any income that is lost because of the closure. The insurer is not on the hook forever though. The insurer is only required to pay during the period of restoration, which is the time it takes the business to fully recuperate from the loss and return to normal business activity.
Does Business Interruption Insurance cover my business during the Coronavirus outbreak?
As we are all well aware, due to the coronavirus, multiple businesses are experiencing an interruption. Whether its large corporations or local small businesses, a majority of them have had to close their doors or lay off a majority of their staff just to remain afloat. The key question now is, for those businesses which have purchased business interruption insurance, will they be covered during this period? As most business owners are finding out, according to the insurance companies, that answer is no. Many small business owners, especially those in the hospitality industry, are finding out that their claims are being denied. Insurance companies are telling these small business owners that the loses associated with the coronavirus are not covered under their policies. This obviously is very concerning to those small business owners who cannot afford to go weeks or months without revenue. That is why these owners purchased this insurance to begin with, in case a disaster occurred, and they were unable to continue business as usual. These businesses are now turning to the courts to remedy this injustice.
In Oklahoma, a lawsuit has already been filed by a Native American tribe for benefits in response to closing down a casino. Specifically, the Chickasaw Nation is requesting $18 Billion in aid because it was forced to shut down its business in response to the coronavirus. They are claiming that the damage to the business is happening because they cannot use the business for the intended purpose. The Chickasaw Nation is asking a judge to declare the coronavirus a loss which has resulted in damage and therefore would be covered under the business interruption insurance policy. A similar lawsuit has been filed in New Orleans by a restaurant there asking a judge to declare the same thing, that is, that the coronavirus is a type of damage which should force insurance companies to pay.
So, what should you do if you feel as though you are being denied benefits under your business interruption insurance policy? Contact an attorney as soon as you can.
Contact a Business Interruption Insurance Attorney Today
Do you need a Covid-19 business interruption insurance attorney? If you believe your business has been affected by the coronavirus and you have business interruption insurance, CONTACT a Florida business interruption insurance attorney immediately to discuss your claim for benefits under the policy and see if you have a valid claim if those benefits were denied. The Dolman Law Group has the experience you need in order to get the compensation you deserve. They are your premier insurance attorneys in the greater Tampa Bay area. Contact them today at (727) 451-6900 for a free, no-risk consultation about your claim.