Business Interruption/Disruption Insurance and the Coronavirus Epidemic
Both large and small businesses stand to lose billions of dollars in revenue as a result of the Coronavirus/COVID-19 epidemic. However, did you know that your business income losses could be covered by your business insurance policy? In today’s post the business insurance lawyer at The Doan Law Firm explains how certain endorsements to business insurance coverage allow business owners to file claims for income lost due to business closures and consequences of the ongoing Coronavirus epidemic.
When most business owners think of insurance, they usually consider only the two most common aspects of business insurance: liability (coverage for accidental injuries to others) and property loss (insurance that covers physical losses to a building or losses of business supplies and inventory. Business owners may also purchase additional insurance coverage to protect the business against other losses such as the death of a business partner or from embezzlement of money. This additional coverage is known as an endorsement (addition) to an insurance policy. A less well known endorsement to business insurance is business interruption/disruption insurance, which protects a business from income lost due to factors that are beyond the control of business owners.
As a general rule, business interruption means that your business is unable to operate normally and is not generating income while a business disruption means that your business continues to operate but is impacted by outside events such as a supply shortage. Business interruption/disruption insurance endorsements can be of two general types: “direct” or “contingent” business interruption coverage.
“Direct” business interruption endorsements
These endorsements cover losses caused by factors that directly disrupt your normal business operations, including natural disasters such as a fire or flooding that damages your business’ factory, warehouse, or store. Most business disruption insurance claims are filed as a result of a natural, physical, disaster. However, and depending on the exclusions listed in your policy, civil disruption such as curfews or mandatory closing orders brought about by the COVID-19 epidemic could qualify as claimable business interruptions, depending on how such events are described in a business interruption insurance policy.
“Contingent” business interruption endorsements
Unlike typical business interruption/disruption insurance coverage, contingent business interruption insurance endorsements cover your losses in cases where external factors that do not directly involve your business cause a disruption to your day-to-day operations. The classic example of a contingent business interruption is that of a fire in a building on the same street of a business that results in a street closure. A business owner who suffers a loss of business income due to the street closure could then file a claim under his or her contingent business interruption endorsement. Depending on the exclusions of your business interruption insurance endorsement, legal scholars tend to view disruptions in the supply chain (e.g. to suppliers or subcontractors) caused by the COVID-19 epidemic that directly affect your business operations would be covered by a contingent disruption endorsement.
Contacting a business disruption/interruption lawyer
Given the massive (but hopefully short-term) disruptions of the small business world caused by the COVID-19 epidemic, small business insurance companies are facing billions if not trillions of dollars in losses. As a small business owner, this means that your insurance carrier will probably be trying to limit its losses by disputing every claim submitted for payment. In such cases, you have the right to file a lawsuit forcing your insurance carrier to honor the terms of your business insurance carrier.
If your daily business operations have been impacted by the COVID-19 epidemic or by other factors that are beyond your control and you feel that your insurance company is unreasonably denying a claim, we invite you to contact the business insurance lawyer at The Doan Law Firm to arrange a free review of the facts in your case and a review of the legal options that may be available to you.
At The Doan Law Firm, we are fully aware of the financial pressures facing you, the small business owner, in this time of unprecedented economic crisis. This is why when you contact our firm to arrange a review of the facts in your business interruption/disruption insurance claim, your case review and consultation with our business insurance lawyer are always free of any charges and do not obligate you to hiring us as your legal counsel. After discussing your case with our staff, should you decide that a lawsuit is in order and that you would like for us to represent you in court, we are willing to work with you at negotiating a fee schedule where we assume the costs of preparing your case for trial in exchange for a percentage of the final settlement we are prepared to win for you.
Your business insurance company has an army of lawyers and insurance adjusters at its disposal whose sole job is to find a way to deny your insurance claim. To make sure that your insurance carrier will treat you fairly, we urge you to contact The Doan Law Firm, a national law practice with offices located throughout the country, to protect your legal right to receiving payment of your business insurance claims.