Business Interruption Claims

Business owners who look to their insurance providers to pay out on their business interruption policies are finding their valid COVID-19 claims on business interruption policies are being denied. Many business owners are suffering major losses due to the COVID-19 virus. This is especially true for those who own restaurants, bars, beauty salons, or other “non-essential” businesses.

The global pandemic of this highly contagious and deadly has caused many areas to order restrictions to limit crowd size and halt businesses where people would be in close contact. Until the coronavirus pandemic is no longer a public health hazard, these businesses lose money daily. When they rightfully turn to the insurance companies they’ve been paying for years for business interruption coverage, these providers use legal loopholes to deny their COVID-19 claims. But many of these insurance companies may be acting in bad faith.

“Business owners and operators have reported that insurance companies have been denying valid COVID-19 claims on business interruption policies,”  “My firm is ready to help any business owner or operator  who is dealing with COVID-19 business interruption or bad faith insurance practices,” said TorkLaw founder Reza Torkzadeh.

What Is Business Interruption Insurance ?

Business interruption insurance covers losses to a business when its income or operations are disrupted by some natural disaster or other event. This might be due to closure related to the disaster, or the rebuilding process after the disaster.

This is different from commercial property insurance, which covers damage to physical objects, such as the building, furnishings, stock, etc. Property insurance usually pays out after events like earthquakes, fires, or floods.

Even though COVID-19 losses may not be physical in nature, they may still be covered under some property insurance policies. And many business owners have additional coverage specifically for business interruption or disruption.

Business owners should carefully read the declaration page of their business interruption policy or their commercial property insurance policy. If the following terms are used to describe the coverage, they may be entitled to compensation for business interruption losses due to COVID-19.

  • Business Interruption/Business Disruption: Covers lost profits due to a disaster.
  • Contingent Business Interruption: Covers losses related to the interruption in business of key suppliers or core customers.
  • Civil Authority: Covers losses due to business closure ordered by a government entity.
  • Lost or Restricted Access: Covers losses that arise because the business staff cannot enter or leave your property. This may also be listed as “Loss of Ingress / Egress.”
  • All Risk: This coverage pays for all losses except those the policy specifically excludes. This may also be listed as Open Perils or Special Perils.

What Will Business Interruption Insurance Compensate?

If a business insurance policy contains coverage for business interruption or disruption, what it will pay out depends on the specific policy. But typical damages include:

  • Lost profits
  • Continuing operating expenses, such as rent, employee salary, etc.
  • Expenses for setting up a temporary location or remote operations
  • Costs related to training new staff or retraining for remote operations

What Happens When Providers Deny Valid COVID-19 Claims

Insurance companies denying claims after sweeping disasters is nothing new. And neither is the practice of taking them to court. The majority of the time, insurance providers who attempt to renege on their policies have been ordered to pay by the courts.

If your business is suffering due COVID-19 pandemic, or if your insurance company has denied valid COVID-19 claims, contact TorkLaw. We will review your policy with you to see if you deserve compensation. Your first consultation is free and you are under no obligation to use our services. But if you do, we will do all we can to ensure you receive the full amount you are owed.

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