Business Interruption Insurance
Filing Successful Claims due to COVID-19
ColinBlackwood.com
Business Interruption Insurance is a type of insurance that covers a business’s loss of income due to a disaster. These disasters can be natural or man-made such as the case of an accidental fire or actions by the government that cause a cease in operations. Business Interruption Insurance policies are not sold as separate policies but are, instead, add-ons to other insurance policies held by the company.
Most policies have a defined period which they covered and this usually spans the duration of the disaster, that is, from the date the interruption began until the date that business as usual commences. There are numerous areas covered by the policies such as:
Profits: Taking into consideration the profit made in the preceding month, the company would be reimbursed this amount as it would stand to reason that this amount would have been made had the event/disaster not occured.
Temporary Location: In cases where the business has to operate temporarily from a new location the policy will cover the costs associated with moving and operation from this location.
Ingress/Egress: As with the current pandemic, when the government mandates that business be closed due to shelter in place orders or curfews, the business can receive compensation through their policy for income lost.
How to File a Claim Due to COVID-19
While Business Interruption Insurance claims are not uncommon, they can be challenging to prove. With all the changes to the economy and businesses as a result of the COVID pandemic, insurers are now faced with numerous claims. In order to successfully file your claim you will have to prove that your business was halted as a result of the pandemic or policies put in place by the government such as restriction in moment, curfews, shelter in place orders and the closure of non-essential businesses.
Policyholders will have to pay close attention to the language of the policy. While the policies cover pandemics, it might not specifically cover COVID-19. Be prepared to provide evidence that property was damaged or contaminated by the virus or that access to your business was blocked due to government orders. Entrepreneurs and businesses in the hospitality industry such as restaurants that have been the hardest hit due to social distancing orders should be insistent on filing and following up on their claims. Insurers are now being flooded with claims and these are being heavily scrutinized.
Do not be deterred if you are initially denied or told you need to prove some amount of physical damage in order for your claim to be successful. Build your case by properly documenting any and all forms of loss or additional expenses incurred since the outbreak. If you have had to hire additional staff, paid for extra sanitation, close your physical business and operate virtually - make a note of that. As legislation changes to mandate that insurance companies consider COVID-19 a disaster covered under the business Interruption Insurance policy, you will have a better chance of appealing a previously denied claim or successfully filing one.
If you need any further guidance, feel free to reach out to us. We’re here to help!