Frequently Asked Questions About Business Interruption Insurance and Coronavirus (COVID-19)

The below FAQ are for general informational purposes only and should not be construed as legal advice.  If you have questions about your business insurance policy and potential coverage for Coronavirus (COVID-19) losses, please contact attorney Blake Frye at 678-384-7441 or bhf@hkw-law.com.

What is business interruption insurance?

• Business interruption insurance is a part of some business insurance policies that insures against damage to property and often includes coverage for income the business loses when forced to close or limit its operations.

What types of losses do business interruption insurance policies cover?

• Coverage details vary from policy to policy. Generally, business interruption insurance covers income lost when the business’ property sustains damage to the extent that it interferes with the business’ normal operations.  A common example is a restaurant roof damaged by a storm and forced to close until repairs are made and the local municipality approves a code inspection.  Insurance may cover the income lost while the business is closed in addition to the actual damage to the roof.

Will business interruption insurance apply to Coronavirus (COVID-19) closures?

• Claims are currently being filed across the U.S. for business interruption caused by Coronavirus shutdowns and litigation is expected in the future. At this point, it is too early to determine how successful businesses will be in recovering lost income claims due to Coronavirus under their insurance policies.

How do I know if I have business interruption coverage?

• Your insurance policy’s specific language will control the extent of coverage. The policy may include endorsements that alter or even conflict with the primary policy form.  Knowing whether your policy covers the specific loss under the circumstances may be extremely difficult to determine because it will depend on how the insurance company, and ultimately perhaps a court, will interpret relevant policy language.

Why should I have a lawyer review my policy?

• Business interruption provisions may be located in different parts of the policy, including its endorsements, and the policy’s exclusions and conditions may dramatically limit or eliminate coverage. Insurance policy language is confusing to the average person.  Key term definitions are often debatable and a court may interpret them, based on legal precedent in your state, in a manner most policyholders do not expect.

What does it cost to have a lawyer review my policy?

• Our fee for an insurance policy review and analysis varies based on the length and complexity of the document, but the average cost is less than $1,000.

If I’ve paid my insurance premiums, won’t my insurance company simply pay a claim for business interruption?

• Not likely, when it’s a Cornavirus-related business interruption. Analysts expect Coronavirus business interruption losses throughout the U.S. to total hundreds of billions of dollars per month.  Insurance companies providing business interruption coverage will not easily accept such extreme losses.  A pandemic is a unique phenomenon and it presents insurance coverage issues that most states have not previously decided.  The uncertainty will give insurance companies a basis to dispute the claims.

Why should I hire lawyer to help my company with a claim?

• A lawyer experienced in insurance coverage disputes can review the full policy, identify all possible bases for a claim, and advise you on the probability of success and specific challenges under your policy. Insurance laws in many states include particular requirements for claim presentation and timing that must be met before filing a lawsuit over denial of an insurance claim.  A lawyer can make sure your business follows the correct procedure so that you are prepared to take legal action if the insurance company denies the claim.

Can I file a business interruption insurance claim and still take advantage of government relief money?

• Generally, yes, but your insurance policy may reduce the amount of the claim by the amount of government assistance received. Again, this issue may vary from state to state and according to your policy’s specific language.

How much does a successful claim pay?

• The amount of a business interruption claim will depend on the extent of your lost income, including how convincingly it can be proven. Furthermore, many states allow claims for additional damages if the insurance company denied the claim in bad faith.  This is another area in which an experienced attorney can be helpful.

What are the advantages of taking early action?

• Learning your rights and options poses no risk and is a relatively low expense, compared with the potential amount of the claim. The judicial system is likely to suffer a litigation backlog on the heels of the Coronavirus pandemic.  The earliest-filed cases will be the earliest to resolve.

If you have questions about your business insurance policy and potential coverage for Coronavirus (COVID-19) losses, please contact attorney Blake Frye at 678-384-7441 or bhf@hkw-law.com.