Covid 19 Business Interruption Insurance

Because of Covid-19, the entire world has been affected by an unprecedented event. As a result, we’ve seen domestic and international travel severely limited, trade diminished, schools closed, beaches deserted, businesses shut down, and unemployment rising to levels not seen since the Great Depression of the 1930s.

In the U.S., businesses have been forced to close because of the rapid and unrelenting spread of the Coronavirus that has taken the lives of nearly 150,000 people as of late July 2020.

Although some restaurants and other businesses are managing, many others remain shuttered and are facing bankruptcy. Fortunately, there’s something called business interruption insurance that can provide some much-needed relief during these tough times.

Many businesses have this insurance – whether they know it or not. Business owners who have a business interruption insurance policy can submit a claim and potentially recover an influx of cash to help them weather the storm.

Businesses are Suffering Due to Covid-19 Fears and Closings

In Texas, businesses opened when infections from the virus appeared to slow, and deaths were decreasing. However, non-essential businesses may have opened too soon, which has only spread the virus. As a result, Governor Abbott has recently required people to wear masks in counties with 20 or more Covid-19 cases, and ordered bars to shut down and restaurants to limit capacity to 50%.

Hopes for a vaccine by the end of the year are high, but for now businesses are suffering. More than ever need, the benefits that business interruption insurance might provide them.

Can Business Interruption Insurance Help?

Businesses can purchase insurance policies that can compensate them for interruptions in their business after a disastrous event such as a hurricane or tornado, flood, or fire.

There are a number of policy types in this type of insurance. Some include “All-Risk” provisions, and will generally include government-ordered business closings and those due to a virus. If a business suffers physical damage or is forced to close because of a pandemic, the insurer should compensate the business for its lost profits. This puts the business in the position it would have been in had the disaster not occurred.

Many businesses have property loss insurance that include interruption or business income loss provisions that owners may not be aware of. It is vital that business owners carefully review their policies, or have an attorney go over them so that they understand their rights.

Injuries that many business interruption policies cover include:

  • Lost profits
  • Fixed costs—this includes operating expenses and property costs that are still being incurred even if your business is shut down
  • Extra expenses—expenses for operating your business if your original site is no longer being used
  • Temporary location costs—costs for moving your business to a temporary location and operating from there
  • Commission and training costs—costs for training workers in operating new equipment replaced by the insurer
  • Civil authority ingress and egress—government-ordered closing that directly causes loss of revenue including street closings or curfews

Many insurance companies are reluctant to approve these claims, even if owners have been paying premiums for years. Insurers are required by law to consider all legitimate claims promptly and in good faith. If you feel your  claim was denied without a valid reason, or the insurer is intentionally making the process more difficult, then speak to a bad faith insurance lawyer.

What are Possible Exclusions for Covid-19?

Depending on the language of your policy, possible exclusions for coverage may include:

  • Voluntary closure—if you voluntarily close your business absent a government-order, you might not be able to claim lost profits
  • Undocumented income—you must document lost income by providing invoices, retail receipts, and tax documents (Insurers should let you know what they need as proof of income)
  • Requirement of physical damage
  • Bacteria and disease exclusion

Regardless of what your policy might exclude, you need to have it carefully reviewed by an experienced lawyer. Also, you may have other policies that may pay for lost income during this crisis.