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Can Business Interruption Insurance Bail You Out?

Posted by Christopher Keller | Mar 19, 2020 | 0 Comments

During times of emergency, people suffer in all kinds of ways. Most of the time, our immediate thoughts go to our personal safety and the welfare of our families and closest friends. For business owners, though, the loss of business during a crisis can be just as serious as the loss of a loved one. To combat these potential interruptions in business, some take extra efforts to purchase insurance specifically meant for times like these. With a COVID-19 pandemic on our hands, many businesses are already experiencing the blows of slow business. If you are a business owner, now is a good time to seek legal counsel as you carefully read all aspects of your insurance policies. This type of initiative could be just the move to keep your business afloat during this time.

What is Business Interruption Insurance?

Business interruption insurance is coverage you purchase to protect yourself in the event of a disaster or fire. The idea is that this money would compensate for any financial losses you encounter because of the natural disaster that took place. This type of insurance is usually part of an overall insurance policy that you purchase. Just like with any insurance policy, coverage can be limited to specific situations or can have certain exclusions. For example, after the 2003 SARS (Severe Acute Respiratory Syndrome) scare, changes were made to most business interruption policies to exclude communicable disease outbreaks.

What are the Requirements to Receive Business Interruption Insurance?

Each insurance company and policy can differ, but most business interruption coverage requires the following factors:

  1. Your business experienced physical damage to the property.
  2. The property itself must already be insured.
  3. Peril must be insured.
  4. The amount of damage or loss should be measurable.  

Floridians should definitely keep this in mind when it comes to hurricane season. Likely, most Florida businesses already have some kind of business interruption insurance, but now is a great time to at least refresh yourselves on the specifics of that policy. Even better, go over that policy with a legal professional to ensure your understanding of the included information.

Can Business Interruption Insurance Be Used for COVID-19?

This can go several different ways. Generally, most insurance companies would not cover the loss of production and revenue due to a communicable disease like COVID-19. The main reason is that most businesses are not experiencing physical damage to their property because of this outbreak, and that's one of the main factors required to receive this kind of help. However, with time and desperation comes loopholes that many overlook. What is considered physical damage done to a business is becoming a gray area. In the case of businesses that manufacture and produce goods, some argue that the outbreak has triggered physical damage due to the amount of sanitizing and disinfecting required to keep areas safe. While it is overall still unlikely that a coronavirus would trigger a payout, it's still worth discussing the possibility with legal counsel.

What Is Contingent Business Interruption Coverage?

Contingent business interruption coverage is a popular third-party option that could help some businesses during a time like this. It specifically includes the loss of commerce caused by disease, may include loss of revenue, and may also include losses due to proximity. For example, if your business is beside a well-known coffee shop that has now closed its dining room to patrons, you may be losing business because you're so close to that coffee shop that normally prompts its customers to also patronize your business. While not always necessary, this is a worthwhile type of coverage to have. It may be too late to purchase it now to aid in the present loss of business, but it would be wise to consider for the future.

What Should Business Owners Do To Protect Themselves During a Pandemic?

  • Keep a close eye on any loans the federal government offers small businesses in the coming weeks.
  • Compare your current policy closely to your new needs.
  • Document any example of interruption to your business.
  • Maintain specific records of these interruptions and their trends.
  • Carefully monitor the timing of your policies and the timing in which you purchase a new one.
  • Consider new ways to continue business (postponing events instead of canceling, changes to transportation, varied options for providing restaurant service).
  • Seek legal counsel to carefully review policies.

Contact Us Today

No one can deny that we are functioning in uncharted waters right now with the impact of this new virus. Every day life is changing as schools are closing, stores are limiting items, and social gatherings are coming to a halt. However, the best thing we can do is learn to adapt. For the sake of your business, contact a trusted lawyer today at Keller, Melchiorre, and Walsh to work through your current insurance policies and make sure you have what you need to keep thriving in this new economy.

About the Author

Christopher Keller

Christopher J. Keller is an experienced plaintiff's personal injury attorney.  He concentrates his practice in the areas of Wrongful Death, Auto, Truck, Train & Motorcycle Accidents and Premises Liability.  Before founding Keller, Melchiorre & Walsh, PLLC, Mr. Keller practiced personal injury ...


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