COVID-19 Business Interruption Claims
The COVID-19 global pandemic has effectively halted operations for most business owners who are now suffering major financial losses. Until the COVID-19 pandemic no longer presents a public health hazard, restaurants, bars, salons, retailers, and other “non-essential” businesses will continue to lose money.
Many business owners purchased Business Interruption insurance to protect against economic losses that were out of their control. Sadly, many, if not most, insurers are denying these claims. In denying your claim, your insurer may be acting in bad faith. Let us look at your policy to determine if your COVID-19 related business losses are covered.
What Is Business Interruption Insurance?
Business interruption insurance covers losses to a business when income and/or operations are disrupted and/or diminished due to an event or disaster. Business interruption insurance differs from traditional commercial property insurance, which ordinarily covers losses due to physical damage. Although COVID-19 property damages are not the same as those caused by fire, hurricane, or tornado, coverage for COVID-19 losses may still be available under some property insurance policies if there has been actual or potential COVID-19 contamination of the property.
Do I have Business Interruption Insurance?
Depends. A complete review of the business insurance policy is necessary. Let us review your policy to determine if you have this coverage. Many businesses have it and don’t even know they’ve been paying for this coverage for many years without ever making a claim.
What are Policy Exclusions?
Insurance policy exclusions are provisions that eliminate coverage or a certain type of risk. Exclusions ultimately work to narrow the scope of coverage provided by an insurance policy. Insurers utilize exclusions to carve away coverage from risks they are unwilling to insure.
What about Viral/Bacteria Exclusions?
This is a specific exclusion written into many policies following the 2003 SARS outbreak. These exclusions directly state that the insurer will not pay for loss or damage caused by any virus, bacterium, or other microorganism that is capable of causing physical distress, illness, or disease. Many business interruption policies exclude coverage for virus and require physical damage in order to qualify for a claims payment.
What about actions from a Civil Authority?
Many insurance policies provide coverage if a civil authority limits/prohibits access to properties. In our area both Mayor Cantrell and Gov. John Bel Edwards made statements that the virus caused property damage and that’s why all non-essential businesses were forced to close.
What losses will business interruption insurance compensate?
Covered losses will depend on the terms of each policy. Some specialized Louisiana business insurance policies, especially those in hospitality, tourism, and health care, provide specific coverages for losses caused by “communicable and infectious diseases.” However, typical business interruption damages may include:
- Lost revenues and profits.
- Event cancellations, supply chain disruptions, etc.
- Operating expenses such as employee salaries, rent, utilities, etc.
- Expenses associated with temporary worksite locations, remote operations, remote equipment purchases, remote resources, etc.
- Decontamination and sanitation services.
If a claim is made for business interruption due to COVID-19, will it get paid?
Perhaps, but not immediately likely. Insurers have almost uniformly told their insureds that coverage is not available for losses related to COVID-19. In denying or delaying payment on valid claims, insurers may be acting in bad faith. If such is the case, the insured may be entitled to additional damages.
What happens when providers deny valid COVID-19 claims?
Sweeping insurance claim denials after disasters are not uncommon. If your business has suffered an economic loss due to the COVID-19 pandemic, and/or if your insurance company has denied valid COVID-19 claims, please contact the Irpino, Avin & Hawkins Law Firm.
Let our team of experienced attorneys help evaluate your policy and economic damages. The consultation and claim review is free.