The five most important questions to ask about business interruption coverage
Q. Am I covered for a COVID-19 loss under my commercial insurance policy?
A. Much depends on how your policy is written. There are inclusions, exclusions and language which suggests that you’re covered under certain circumstances but not others. You can read the policy on your own, but it’s better to have an Insurance Litigation Group (ILG) attorney read it with you. That trained individual can draw upon the law firm’s in-depth knowledge of business interruption insurance and legal interpretations of insurance policies. That lawyer is equipped to explain your coverage and your options.
A policy may have an exclusion for pandemics, even specify viruses. That is not an ironclad statement. An experienced ILG lawyer will read the entire document for sections that may be unrelated to a pandemic and still qualify your company for benefits related to the economic damage that it has done.
Q. What can I claim under my policy?
A. Benefits vary by policy and very often by industry. For example, hotels and health care organizations often have special provisions in their policies for pandemics. Here are some of the losses you can claim. Working with your business advisors, the attorneys at Insurance Litigation Group may find others:
• Lost business income
• Employee salaries
• Lease payments or, if a property owner, lost rental income
• Loan payments
• Expenses of operating from a temporary location and advertising announcing the move location.
• Inventory losses
• Supplier payments
• Taxes and utilities
Q. My insurance company tells me that without physical damage I don’t have a valid claim. Why is that?
A. Many policies are written with other natural disasters in mind. Business interruption insurance covers expenses and lost income for the time the business is closed because it’s not safe or practical to operate it.
Courts have interpreted the term “physical damage” to include more than a physical event such as a fire. State and local government orders can cause financial damage. Our Insurance Litigation Group attorneys can draw upon the many court rulings that have expanded the definition of physical or direct loss to include more than just the obvious qualifications such as damage from a natural fire. They can seek benefits for losses that resulted from the presence of COVID-19.
Q. My claim was rejected. Is there anything I can do?
A. Yes. You can sue on the denied claim, pressing the matter in court if necessary. The insurance company does not have the last word; the justice system does.
Your next step depends in part on your policy and in part on what the courts have said about policies like yours. Insurance policy lawsuits related to natural disasters such as SARS and Hurricane Katrina have produced court rulings that can work in your favor. An attorney at the Insurance Litigation Group will review your policy for free to determine what steps you can take.
Q. Let’s say we sue. How long will it take to collect?
A. ILG will seek to settle the case fairly and as quickly as possible. We realize that the pandemic has already strained your corporate finances. We will actively negotiate with the insurance company even as we move forward with the lawsuit. Courts set calendars for hearings and trials, so when a final judgment is handed down depends on many factors, including a judge’s caseload.
A big unknown right now that may work in our favor is that many other businesses will also be filing court claims to recover damages related to their policies. Depending on the circumstances, the insurer will be may be more willing to settle to reduce the number of pending cases.