Financial damage to businesses during the Coronavirus outbreak are undeniable. With decreased demand in many sectors due to closures and social distancing, small businesses are bearing the brunt of the financial costs to their bottom line.

While many businesses have Business Interruption Insurance, many of the existing policies are not equipped to explain whether or not compensation can be awarded in the face of a virus.

With much instability still to come as states begin to re-open, and perhaps face future closures, many are wondering whether filing a business interruption claim can help blunt the hardship they, and their staff, are experiencing from COVID-19.

Below is a guide to Business interruption insurance, what it is, what it generally covers, and what to do if you think it’s time to file a claim.

What is business interruption Insurance?

Business interruption insurance is a type of policy provision that will help you cover the financial loss of having an interruption in normal day-to-day business. This is usually because of some form of property damage that otherwise prohibits your business from remaining open of functioning at capacity.

Note: while the cause of the interruption is normally a physical instance (such as damage of natural disaster), this type of insurance is not the same as commercial general liability. It does not cover the damage to the property, but rather, the revenue lost as a result of that damage.

The Impact of COVID-19

The main issue businesses are facing with COVID-19 related claims is that most business interruption policies are written to cover work interruptions due to some kind of local, physical damage. For instance, if a storm causes damage to a storefront necessitating a week or two of business closures, interruption insurance would help cover the resulting financial damages.

In the case of Coronavirus, many businesses have either voluntarily (or involuntarily) closed without this damage component being met. This places many business owners in the grey area of their policy, especially when their policies don’t make note of illness-specific parameters.

While many congressional members are asking that insurance companies cover Coronavirus-based losses under their interruption policies, there is no widespread legislation on the matter. As such, there is still much uncertainty on what different providers will actually cover and whether they are forced to do so in your specific state.

Calculating Damages

Business interruption insurance covers the damages that result from the catastrophic event resulting in your business closure. The main categories of damages you can claim are covered under the following:

  • Revenue
  • Property costs and Payments
  • Loan Payments
  • Taxes
  • Payroll
  • Relocation (if applicable)

There are also several types of damages that are not covered by business interruption insurance. These include damage to property within the building, utilities, and lost undocumented income. However, it is wise to check your specific policy as you may have coverage for these damages under a different section such as commercial general liability insurance.

How to tell if you are covered

Looking at your policy, find whether you have business interruption coverage and then see the requirements you need to meet in order to receive coverage.

The best course of action going forward after this is to compile concrete evidence of your revenue losses as they relate to Coronavirus. This is integral to making your claim as business interruption insurance only covers quantitative damages. Speculative evidence will not count toward your claim and will be very unlikely to seek recovery on.

When to Ask for Legal Assistance

In times like these, having a legal team is integral to pursuing the best outcome for your business. At Dave Roy Law, this is what we help you achieve.

Located conveniently in West Palm Beach, we can handle all your interruption insurance needs. Staffed with experienced lawyers, there is very little we have not seen.

We are dedicated to helping you and your business recover from the devastating effects of Coronavirus. Start on the right foot by contacting us at 561-729-0095 to schedule an appointment and get your business back on the right track.

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