Business interruption insurance (BI) covers the loss of income a business may suffer following a disaster that shuts down a business for some time or forces them to accommodate rebuilding. BI is a segment of commercial property cover that must be purchased in addition to personal property damage cover. Under BI, business owners are entitled to compensation to cover suspended operations, and property owners to loss of rental income.
Depending on the type of business, BI can cover different things. In the majority of cases, the business interruption insurance covers a businesses ‘Net Income’ that would have occurred & expenses they would have incurred if it wasn’t for the disaster. This can include covering payroll costs for some, and for manufacturers net income can include the net sales value of production.
There are some conditions that must be met in order to ‘trigger’ BI. First, there must be a slowing down or shut down of business operations. Secondly, The slow down or shut down must be the result of a physical loss or damage to property due to a covered cause of loss. Finally, there must actually be a loss sustained in order to trigger compensation.
1. Property Forms & Endorsement
Here it is important to look at the causes of loss included in the policy, the commercial property conditions required and if there are any virus/bacteria exclusions within the documentation. These determine under what circumstances BI will cover your businesses losses.
2. Property Declarations
Under this section, you will find a great deal of important information such as a description of what constitutes a premise, the coverages provided by the policy, any additional optional coverages that can be added to a policy, the causes of loss covered under the policy and limits of liability.
3. Business Income & Extra Expense Coverage Form
Here you will find the coverage: including covered causes of loss and any exceptions to this and any additional coverages that can be added to the policy. You will also be able to explore the limitations of the insurance policy here, as well as the loss conditions, coinsurance and the definitions for the policy wording.
More often than not, policies exclude damages caused by microorganisms. However policy wording may leave loopholes. Policy wording can often be broad and vague, and some have speculated that the damages caused by coronavirus may actually be covered under business interruption insurance. In some cases, policies don’t have a virus exclusion at all, others may have just a fungus or bacteria exclusion of which COVID-19 does not fall under. In some instances, there may even be a microorganism inclusion in the policy that covers businesses for the losses incurred due to COVID-19 during this unprecedented time.
Most carriers are currently denying claims being submitted under COVID-19, however, as more and more claims are being submitted there will be a precedent set and with proper legal action there may be options for compensation.
Here are some of the most common questions we have received so far:
Q: Should I still file a claim with my carrier if I have the Virus and Bacterial Exclusion?
A: You should file a claim because as more and more claims get filed there may be future rulings that make the claim not legally binding.
Q: How do I know if I have Business Interruption Insurance?
A: The best thing you can do is to contact your carrier and ask your carrier and furthermore ask for a copy of your policy. Your policy is your contact between you and your insurance company.
Q: Should I file a claim myself or contact an attorney?
A: Even though you can file a claim yourself it is best to consult with an attorney as most carriers have denied coverage so far. An attorney that specializes in insurance claims can present a much stronger case on your behalf.
Q: Can I submit a claim if my business has not incurred any losses?
A: No, for you to make a claim your business must have suffered losses. There are certainly businesses that have performed better during this pandemic and will not qualify.
This Blog is made available by the law firm publisher, PEDRAM LAW, PC, for educational purposes. It provides general information and a general understanding of the law, but does not provide specific legal advice. By using this site, commenting on posts, or sending inquiries through the site or contact email, you confirm that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.
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