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Covid-19 and Business Interruption Insurance

  Covid-19 and Business Interruption Insurance 

New waters to navigate.  Will your business interruption coverage cover your losses related to the Coronavirus pandemic?  Will your favorite restaurant survive because they were prudent and carried this coverage?  And the answer is ----------- maybe -------but probably not without a fight.

The government forces you to suspend business operations.  You lose money.  You have insurance designed to cover losses when your business is unintentionally closed due to “physical loss or damage to property”.  You suffered a “loss” of the use of your “property” and lost money.  The insurance industry is promoting a “we’re not responsible” position. Their reasons are changing as the days pass.  It is understandable that they would take this position since the sheer volume of these claims is going to be massive.  In the end, the government may even help underwrite the payment of claims, but no one knows at this juncture.  The experience of one of my clients at this point is that the claim has not been rejected outright, but the communications make it clear that the company is considering denying these claims. I have been told of at least one or two claims that have supposedly been paid, but I do not yet know whether they were paid under the very limited “civil authority” coverage portion of the policy or under the financially superior general business interruption coverage, if they were, in fact, paid at all.

How should you proceed?  File promptly and file properly.  Be prepared to document your losses.  This is where all that boring record keeping can prove its worth.  Do not accept a denial at face value.  In order to position your claim within your policy language, there are both general approaches and specific words you should use.  Generally speaking, you want to focus on “pandemic” and not “virus”, and you should cite specific government mandates to suspend operations. You should review your entire policy carefully to look for exclusions or other language that the insurance company might seize upon to justify denying your claim. Word your claim as broadly as possible. State that you are "claiming benefits under the business interruption and the civil authority provisions as well as any other applicable coverages." If you find exclusions in your policy that might seem to apply, use wording that avoids those exclusions.


A client of mine received a followup request for information in which the client was asked to respond "yes" or "no" to several questions. That can be a trap. For instance, answering "no" to a question such as "Did you sustain damage to your property?" might open up an argument for no coverage by the insurance company. Your policy likely covers "damage to or loss of property". You did lose the use of your property when you were forced to suspend operations, so "no" would not be an appropriate answer. If possible, try not to use "yes" or "no". Rather, describe your loss in answer to the question in way that brings it within your coverage and does not invoke any specific exclusion found in your policy.


A client of mine received a followup request for information in which the client was asked to respond "yes" or "no" to several questions. That can be a trap. For instance, answering "no" to a question such as "Did you sustain damage to your property?" might open up an argument for no coverage by the insurance company. Your policy likely covers "damage to or loss of property". You did lose the use of your property when you were forced to suspend operations, so "no" would not be an appropriate answer. If possible, try not to use "yes" or "no". Rather, describe your loss in answer to the question in way that brings it within your coverage and does not invoke any specific exclusion found in your policy.


Be prepared for a long, hard fight. It is the opinion of those of us who are representing business owners in seeking to recover benefits under the business interruption coverages that the insurance companies will refuse to cover these pandemic related losses unless and until the courts have sent a clear signal that they cannot escape paying these claims or until the government steps in legislatively to deal with the claims in some manner.


You should strongly consider consulting an attorney who has taken the time to become familiar with these claims to assist you in wording the claim and, perhaps, to handle the claim for you. 


Good luck to you and be safe and considerate of others while we weather this "storm" together.


The Roland Brown Law Firm focuses primarily upon representation of persons injured by the negligence of others, generally in truck, automobile, motorcycle and bicycle crashes. However, much of the insurance related information dealt with in those cases applies equally to the current pandemic related business interruption insurance claims and so we are handling those claims as well and would welcome the opportunity to discuss your claim with you. These claims can be handed on a contingency fee basis (no fee unless you recover).


©2020-Roland Brown

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