BUSINESS INTERRUPTIONS DUE TO CORONAVIRUS
HAVE YOUR BUSINESS INTERRUPTION INSURANCE CLAIMS BEEN DENIED?
What is Business Interruption Insurance?
Also known as Business Income Insurance, it is party of commercial property coverage. We see this used for business owners and tenants recovering the loss of income due to suspended operations and in property owners recovering the loss of rent due to suspended use of the rented space.
What does it cover?
Usually this type of insurance covers
- Net Income that would have been earned if business operations continued as usual and
- Normal operating expenses, including payroll for employees.
What do you need to recover on your claim?
- Slowdown, shutdown, or suspension of business operations
- Caused by direct physical loss of or damage to property
- That is a result of a Covered Cause of Loss, and
- Actual loss is sustained.
What is Civil Authority Coverage?
- Government prohibits access to insured property
- Because of direct physical loss or damage to other properties in the area
- That is a result of a Covered Cause of Loss
Direct Physical Loss
Usually this requires an actual, physical damage to property. Often it must be proven that the prohibition was done in response to actual damage, not solely to prevent future damage. Many claims will be denied because insurance companies will argue that all executive orders limiting business operations were done solely to prevent the future harm of spreading COVID-19.
Prohibition of Access
The insured property has to be directly prohibited by the order, not just drastically affected the prohibition of related businesses. Many claims will be denied because insurance companies will argue that executive orders limited business operations but did not strictly prohibit anyone from access.
Covered Cause of Loss
Certain recovery may not be prohibited, but just limited according to a specific policy.
Certain policies specifically exclude damages caused by viruses, while others only have exclusions for damages caused by fungus or bacteria, others have no exclusions at all, and others specifically include microorganisms.
Look at your policy!
Soroka & Associates is here to help you understand what is written in your insurance policy and advise you regarding your options.
Some jurisdictions interpret insurance policy more broadly than others. Specifically within Business Interruption Insurance, insurers have been required to pay despite lack of physical harm to the property. Similarly, regarding Civil Authority Coverage, some courts have required insurers to pay without physical damage.
These are complex concepts affecting so many business owners and operators today. Please consult an experienced attorney to help you through this difficult time. Don’t risk making unnecessary and costly delays – talk to an attorney at Soroka & Associates, LLC, by calling 614-358-6525 or e-mailing us at [email protected].