When you purchase insurance, you expect it to cover certain losses, right? Unfortunately, many businesses in the US are finding out that’s not the case. With the outbreak of COVID-19, commonly known as coronavirus, government officials are implementing mandates and orders that are crippling businesses.
In many cases, if your business is not deemed "essential," you are faced with the decision to either alter its regular operation and suffer a financial loss or continue its normal operation and suffer legal repercussions. You, like many other law-abiding business owners, see this as an easy decision: to choose the former because (1) it's the law, and (2) your Business Interruption Insurance (BII) will cover any financial loss you incur.
However, many insurance companies are declining such claims, leaving businesses insolvent and the unemployment rate to skyrocket. Stop Insurance Denial could help you file for a lawsuit against your insurer. We are here to hold insurance companies accountable to you when you deserve it. Talk to us about your COVID 19 Business Interruption insurance denial today for legal counsel.
General Overview of Business Interruption Insurance
Business Interruption insurance, which is typically included with commercial property insurance policies, covers lost business income incurred as a result of certain types of damage. Whether a business's lost revenue will be covered under its Business Interruption Insurance may depend on several considerations, some of which include:
- The express language in the policy
- Whether the policy is ambiguous
- How courts have previously ruled on similar issues
Every policy is different and, consequently, will require careful review from an expert to determine whether a business’s lost income may be covered under its Business Interruption Insurance.
Critically, just because the insurer denies a business's claim for lost income, does not necessarily mean the company is legally precluded from coverage. It is not uncommon for the following scenario to occur: a business incurs lost revenue and makes a Business Interruption claim under its insurance policy; the insurer denies the business's claim; the business seeks legal representation to dispute the insurer's denial of the application; and either a court enters a judgment against the insurer and in favor of the business, or the insurer and business settle the dispute for a mutually agreeable amount.
Similarly, if any level of government-mandated or ordered a business to alter its regular operations as a precautionary measure to mitigate the spread of COVID-19, and such alteration resulted in the company incurring lost income, the business may be covered under its Business Interruption insurance. However, the insurer already denied the business’s claim.
What Does a Business Interruption Insurance Cover?
Depending on your coverage agreement with your insurer, the business interruption policy would cover more than lost income. Typically, BII covers business costs, such as:
Profits You Could Have Earned If There Was No COVID-19 Breakout
Your business interruption policy should reimburse all profits you would have accrued had the COVId-19 pandemic not ensued. The insurer calculates the profit reimbursements depending on what your business earned in the previous months. Imagine the loss you incur following the pandemic, and the government orders you to close the business until further notice. If the insurer denies reimbursing profits you could have earned, you need to hire a reputable lawyer.
Employee Wages After Business Shutdown
In the wake of COVI-19, many employers and businesses alike have closed down per government directives. Closing down on your business means that you cannot earn profits; hence, you cannot continue remunerating your staff and employees. Your business interruption policy should pay your employees’ salary. Also, if the authorities consider your business as essential, the BII can settle your workers’ wages if the business is closed down to avoid losing staff members.
Giving Tax Their Share
Even though the government directs closure of business premises to fight against the coronavirus pandemic, business owners are required to pay taxes and, in good time, failure to which they face stiff penalties and pay hefty fines. That means you should pay your business taxes after closing down. Your BII plans should cater for taxes you could have paid if the government didn’t direct that you close business following COVID-19 outbreak. You will need the services of a competent lawyer should your insurer deny your claims.
Fixed Costs That Your Business Incurs
To run an efficient business, you incur several expenses, for example, purchasing supplies, operating costs, and other business costs. Currently, businesses are closing down, and workers are working from home. If you want your employees to work efficiently at the comfort of their houses, you must provide internet connectivity, computers, and other necessary gadgets that facilitate communication between you and other team members. Your insurer, in this case, is liable to cater for these costs. The BII should constitute such fixed costs when a pandemic struck.
Business owners apply for loans for various reasons like adding stock, acquisition of another business, and other business operations. When taking these loans, you do not project future disasters or pandemics. You have no worries that a pandemic could strike and lack ways to pay back loans because you insured your business against business interruptions.
Banks need you to pay back loans even as COVID-19 continues spreading. One or two banks could enter into new payment plans in a bid to cushion their clients, but many others (the lion’s share) need businesses to pay back loans. If you close down your business per government’s restrictions, you would expect that your business interruption insurance policy settles your loan payments and in time.
Training Costs and Commission
Pandemics like COVID-19 compel companies to employ new systems, programs, and expert staff. Apart from buying new tools for your workers to work from home because of coronavirus, some need training on the usage of the gadgets. Here, you could incur training costs plus expenses to pay trainers, either on a permanent or part-time basis. Since these are considered business interruptions, your BII cover should help pay the costs of new equipment and training expenses.
Temporary Relocation/ Location
Businesses are doing everything in their jurisdiction to stay afloat during the coronavirus pandemic. The government has been giving directives on the way you should operate and run your business while observing safety. To save your business from any losses incurred from closing down, you could decide to shift locations to a town where restrictions are lesser or move the business to your home. For instance, if you are in the business of making leather bags, the government considers this as a non-essential business. Therefore, you need to close down until when the pandemic is contained.
Moving some machinery from your business premises to your home, to make bags from home and sell online need money. If you have a business interruption insurance policy, you could save on temporary relocation fees. The insurer could probably fight hard to refute the claims for various reasons. Since it is your right for compensation as an insured enterprise, you could seek the services of a lawyer to compel the insurer to pay your relocation fees.
COVID-19 has introduced numerous costs in businesses beyond fixed costs, relocation fees, wages, and taxes. These expenses help your business to keep running or begin operations again once the pandemic gets contained, and they include furnishings, marketing materials, and new supplies.
How to Compute Business Interruption Insurance
Insurers calculate Business Interruption Insurance based on your past financial records. There is a policy limit, the maximum amount that the insurer reimburses towards a covered claim. However, losses that are above what the BII covers are your responsibility. It is recommended that you chose the limit that is suitable for your business.
The things to consider when determining a coverage limit are:
- After the COVID-19 or another pandemic, what’s the approximate time would you take to get your business back in operation?
- In case you close your business temporarily to contain coronavirus, how safe is your premises from break-ins and other disturbances?
- Are there similar commercial premises within your area?
Is Business Interruption Insurance Included in my Business Insurance Policy?
Business insurance policies come in different categories and capacities. BII is the only coverage that accounts for potential earnings and what you could have earned when accessing losses. If you don't have business interruption insurance and you close your business due to coronavirus, you could strain to settle debts, loans, and fixed costs, among others, on your own. Understand that you cannot purchase BII alone but rather as a part of comprehensive business coverage. Take your time and understand the limitations of your business insurance policies BII coverage.
To know if BII is included in your business income insurance policy, consult an insurance expert. Also, you could contact your insurer, broker, company, or agent if you lack direct access to your plan. Your insurer could fail to honor your policy when you are on the verge of closing down your business due to COVID-19, and your existing policy includes BII. Find a business interruption attorney should this happen for legal counsel.
The Process of Filing A Business Interruption Insurance Claim
Filling your BII claim doesn’t have to be a daunting process. In case you need help with claiming your business interruption insurance, and you want to avoid a tug of war with your insurer, contact your business interruption lawyer. Do this when filing a business interruption claim:
- When the government orders that you close your business, mainly due to the COVID-19 pandemic, reach out to your insurer
- Peruse through your existing business insurance policy to understand your responsibilities
- Follow the directives and close down your business
- Arrange records of your business revenue before the pandemic. Keep updating records of the company' costs, operations, and other expenses during the interruption period
Business Interruption Insurance Claim Denial of Access
By default, you expect your insurer to compensate for covered expenses lost because of the coronavirus pandemic. However, your insurer could deny coverage payout leaving you with the burden of rooting all the costs. If your insurer denies you compensation per BII statements, that doesn’t mean that you don’t deserve to get compensated.
Many insurers refuse to honor their BII policies and wrongfully deny their rightful claims. Your BII should support you when you cannot operate your business generally because of coronavirus. If your BII claim is wrongfully denied, talk to the business interruption attorney and discuss your potential lawsuit.
How to File a Business Interruption Claim Denial Case
Across the US, businesses are filing claim denial lawsuits. These lawsuits challenge insurers who claim COVID-19 interruptions are not included in BII policies. More business owners are alleging breach of contract and bad faith by insurance firms for failing to honor policies. When filing your BII denial lawsuit after a wrongfully denied claim, you expect compensation. Your lawsuit not only offers you the chance to get compensated but also ensures that the insurer will honor your future business’ claims.
The process of filing business interruption claim denial lawsuit include:
- Attempt to mitigate losses and damages to your business in the ways you can. This helps strengthen your lawsuit
- Gather and arrange business records, for instance, records of your insurer correspondence, copies of your company costs incurred due to coronavirus, details of all persons you spoke to whether in person or via phone calls. Details should include their titles, names, and dates of contact
- Update records of your revenue. Operation costs and additional expenses following the pandemic
- Call your business interruption lawyers to help with filling your case and gather the necessary evidence
BII Policy Breach of Contract
A more significant percentage of the businesses filling BII denial lawsuits during the COVID-19 pandemic fault insurer’s breach of contract. A breach of contract occurs when your insurer refuses to pay compensation to the insured they are legally required to pay. When you and your insurer sign on the dotted line, you enter a legally binding contract that requires both to honor their obligations. This means that you should pay premiums, and the insurance firm makes payouts on genuine claims. The insurer breaches the contract when they fail to honor claims, and also, your refusal to pay premiums is considered a breach of contract.
BII Coverage Bad Faith Claim
Here, the insurance firm could claim that coronavirus pandemic is not qualified for coverage. For instance, the insurer can argue inconsistencies in what is considered a “pandemic.” Here, your business interruption lawyer could say that the insurance firm didn't intend to honor the claims and are acting in bad faith. You must find an experienced and knowledgeable attorney since these lawsuits raise debate over legal semantics.
Evidence for a Business Interruption Claim Denial Lawsuit
Just like other court cases, you need to have proper proof that your insurance firm denied your claim. When contacting your business interaction attorney, ensure that you have correct records, documentation, and evidence that:
- You have the required license to operate your business
- You have the needed business insurance policy and that which includes business interruption coverage
- You filed your claim in good time
- Even though you filed your claim in the right manner, the insurer denied or failed to honor the claim
Ideal Steps for Businesses to Preserve Their Business Interruption Coverage
There probably will be decades if not years of insurance policy lawsuits concerning claims of COVID 19 Business Interruption Insurance denial. Therefore, it is essential to note that you, as the business owner, should do your part to preserve the claim.
Review the Insurance Cover Before Acquisition and Record Decisions
It is evident that business owners and entrepreneurs alike make fast business decisions. Understand that the potential insurance policy does not involve the way you make decisions, how you make the decision, or how you implement the decision. There are numerous existing lawsuits against insurers for business interruptions claims denial relating to COVID-19. Businesspersons and their lawyers should, before settling on a policy, review it and make informed choices.
Insurance agreements, conditions, policy coverage, endorsements, and exclusions vary widely. The conditions that cause the cessation of your business's operations are unique. Taking your time to review the coverage terms can offer the best chance for you to file a claim successfully.
Also, how the insurer communicates and implements the coverage can determine if a particular insurance claim gets covered. You could choose to work with brokers or independent insurance experts. Even though this route could offer some benefit to you, it is essential to note that your attorney could have problems providing policy advice and accessing legal filings.
Make the Best Business Decision
Getting your business covered against disaster and pandemic is vital, but this shouldn’t be the single driving factor to your decision making. You have to do what it takes to run your business smoothly. The best decision you can make is consulting insurance experts for in-depth counsel. Your current insurance decision determines if you are liable for business interruption coverage should a pandemic comes knocking.
Measure and Document All Your Business’s Losses
Before COVID-19 struck, it is unlikely that businesses made business interruption claims yours inclusive. This means that you are new to evaluate and record business interruption losses. If you are incurring losses, it is recommended that you document the extent, nature, and cause of the losses drawing advice from legal and accounting experts.
You should also identify, track, and mitigate all losses. For example, if, in altering the business's operations, employees' scope of work changed from "server" to "deliverer," their titles should be changed because the business may be entitled to a reduction in its premium, as workers' compensation and other coverages may vary. Even though you have a BBI policy, the amount of payment may be compromised if you cannot measure and document losses accurately and on time.
Handle Your Communications with Caution
When filing a BBI claim denial lawsuit, your insurer could ask to review any communication that links to the business changes, closing of your business, or losses incurred, especially following coronavirus. If you are not careful with your contacts, the insurer could use these against you in a BBI dispute. Always consult your lawyer when in doubt concerning the right way to handle communications.
Make A Timely Business Interruption Claim
You must give notice. All Business Interruption policies have specific timing requirements for policyholders to notify the insurer. The policyholder must comply with the timing requirements or risk forfeiting the claim. Additionally, policyholders may also be required to submit a sworn proof of claim, sometimes within a defined period. The policyholder must comply with the terms of the policy and work with the insurer. For example, if the policyholder submits a sworn proof of claim, and the insurer requests additional information, the policyholder shall do so in a timely fashion.
Contact Your Insurer and Address Their Response
After you have reported your business interruption claim, the insurance company assigns an adjuster or sends your claim to coverage counsel. When the insurance firm responds to your application, it is advisable that before giving a reply, you consult counsel. Your lawyer can advise on the next step according to the insurer’s response.
Should I Take Legal Action If My Claim Is Denied?
With the help of a competent business interruption attorney, you need to legally analyze the strength of your lawsuit against the insurance company if they deny your claim. These claims could include financial compensation, tax payments, and relocation fees, and many other business costs. There exist several variables to consider before understanding if a valid claim is available to the insured and if your lawsuit is worth filing. Before filing the lawsuit, see to it that there are no missed premium payments or statutes of limitations overlooked.
Contact a Insurance Denial Attorney for COVID-19 Business Interruption Insurance Denial Near Me
The US government has put in place measures that have seen several businesses close due to the coronavirus pandemic. Enterprises are now rushing to file business interruption claims with their insurers. If your business is suffering or suffered a loss as a result of a governmental mandate or order, you should act promptly to preserve and file your claim. You should be sure to timely provide notice to your insurer to reserve all rights under the policy.
Unfortunately, not all BII claims end in fair compensation for lost income. If your claim is denied, seek legal advice from Stop Insurance Denial and have a professional review your policy to determine whether you may be entitled to coverage. To get our free and zero-obligation consultation on your COVID-19 BII denial case, call us today at 310-695-5241.