The government mandated shutdown of non-essential businesses in response to COVID-19 has forced thousands of business owners to temporarily close their doors. Business interruption insurance can help replace income lost when business is halted for some reason. However, many owners who paid premiums for years are now being told that their insurance doesn’t cover coronavirus.
Sanders Phillips Grossman and its sister firm, Milberg Phillips Grossman, recently launched a Coronavirus Litigation Task Force to investigate denied business interruption claims and other matters. If your business was forced to close because of the virus and had its interruption insurance claim denied, you might have a case. Learn your legal options during a free case review.
Business Interruption Insurance Policies and COVID-19
Business interruption coverage is not purchased as a separate policy. It is added to a property insurance policy or bundled in a business owner policy. Each policy is particular to the insurance provider and the insured’s coverage needs. A typical policy can include profit reimbursement, mortgage payments, rent and lease payments, loan payments, taxes, payroll costs, utilities, and relocation costs during the period that the insured’s operations are suspended (known as the “period of restoration”).
Importantly, the suspension of business operations must be caused by a “Covered Cause of Loss.” This is where coronavirus-related claims become contentious. While some policies have an “Exclusion for Loss Due to Virus or Bacteria,” other policies aren’t so explicit. But this is where specifics matter. Because viruses are not bacteria, if your policy only excludes coverage for bacteria, you might still have coverage for coronavirus.
Business interruption coverage usually is only triggered if you have property loss that leads to the business interruption. But as the National Law Review explains, “if the Coronavirus is found within the confines of a workplace or business, this arguably constitutes damage to the property, albeit at a microscopic level that cannot be seen.”
On March 19, New Orleans restaurant owners filed a lawsuit against their insurer, claiming that their business interruption policy should cover damages caused by the COVID-19 outbreak. The plaintiffs hope to recover the income they lost during the outbreak and seek reimbursement of the additional sanitation costs they incurred. The restaurant owners claim that their policy does not contain an “Exclusion for Loss Due to Virus or Bacteria” clause.
Finally, if your policy specifically excludes viruses, you might still have a claim if you were forced to close because a government authority prevented access to your business. During the coronavirus outbreak, most states have ordered all non-essential businesses to seize or limit operations for the foreseeable future.
COVID-19 Business Interruption Policy Lawsuits
Our advice to business owners forced to shut down due to COVID-19 is to file your interruption claim with the insurance company. If the claim is denied, you should discuss the denial with an attorney to find out whether the denial is justified. It is unlikely that an existing business interruption policy has considered the coronavirus specifically. Based on the actual policy details, you may have grounds for disputing the denial.
Keep in mind that insurance agents works for the insurance company, and have the insurer’s best interests in mind—not yours. To make sure that your interests are protected, get in touch with Sanders Phillips Grossman and speak to an attorney, free of charge.