The COVID-19 pandemic response has devastated small businesses around the country. Millions have been forced to shut their doors to the public, severely reduce business hours, cut back on staff, and even change their business operations entirely. Typically, when something like this happens – an event that is out of your control but results in significant interruptions to your ability to generate revenue – you can expect support from your business interruption insurance. However, there are many caveats to this program that insurers are relying on to deny business owners support during this time. To know whether you qualify for business interruption insurance, the business interruption lawyers at Riddle & Brantley have provided very important information that answers your most concerning questions regarding the insurance policy.
Filing for Business Interruption Insurance During the Coronavirus Pandemic
Business interruption insurance is meant to protect against economic losses that occur due to interferences to your company operations. These interferences must result in the inability of your business to generate revenue or put company equipment and other property to its intended use. Any income that you would have earned apart from the interference will be compensated, along with related operations expenses that are incurred during the restoration period. (The restoration period is the time required for any damaged property or halted operations to resume.) Specifics will vary depending on the insurer.
While you can file for business interruption insurance as a result of profit losses due to the coronavirus, your chances of being approved are highly dependent on your specific insurer and any existing loopholes in the policy. The problem many business owners are facing right now is that insurers are claiming that viral and bacterial diseases do not fall under the criteria for coverage. An insurance company may have a policy under a name similar to “Communicable Disease Coverage.” While it does not necessarily cover the government-mandated restrictions in response to the ongoing pandemic, it does cover contagious diseases to an extent.
Applying for Business Interruption Insurance Coverage
When filing for business interruption insurance, you must prove that your business closure or another inability to earn revenue is a direct consequence of the communicable disease event. This terminology is not used in all policies, so be sure to review the specifics of your coverage. (Note: A “communicable disease” is one that is caused by a biological agent and is or can be transmitted either directly or indirectly between human beings or from humans to animals, or vice versa.)
Though many insurers are seeking loopholes to deny coverage to their clients, you may find relief in the two recent endorsement forms introduced by the Insurance Services Office (ISO):
- Business Interruption: Limited Coverage for Certain Civil Authority Orders Relating to Coronavirus
- Business Interruption: Limited Coverage for Certain Civil Authority Orders Relating to Coronavirus (Including Orders Restricting Some Modes of Public Transportation)
Losses related specifically to government-mandated restrictions (i.e., quarantine) will be compensated by this coverage.
Do not be discouraged if you are denied assistance during this time. When you are ready to apply for this coverage, send a written notice to your agent first. When you do this, you later require that your insurance company sends you a written explanation, should they deny you assistance. If you are faced with a denial a second time, contact a business interruption lawyer to determine how to move forward.