What is Business Interruption Insurance?

Business interruption insurance is a type of insurance that covers unexpected reasons that prevent you from doing business. When there are unusual events, like the COVID-19 pandemic, and you find yourself unable to conduct normal operations, business interruption insurance can step in. The payments that you receive from making your claim can keep the business afloat by paying bills. The payments can also provide a replacement for lost income that you and your family depend on.

Business Interruption Insurance Claims

The process of receiving the compensation that you deserve is a business interruption insurance claim. For shuttered businesses, filing the claim begins the process. The business owner notifies the insurance company of their intention to make a claim on their policy. Then, they submit supporting evidence, and the insurance company reviews the claim. If the insurance company doesn't offer fair payment for your business interruption claim, a lawsuit may be a remedy.

Standard Business Interruption Coverage

Standard business interruption coverage may take several forms. Some policies are comprehensive. These policies cover all interruption-related losses that are not explicitly excluded elsewhere in the policy. Other policies are limited to only some types of harm that make the physical property itself unusable. These policies may exclude situations where the property itself is still functional, but the manner of business is interrupted. There are many different business interruption insurance terms to keep track of in these situations.

Really, there is no normal or standard when it comes to business interruption coverage. To determine what coverage applies, it's important to look critically at the policy language. Business interruption claims can occur under a wide variety of circumstances. A business interruption attorney can help you determine the coverage in your case.
Eligibility Requirements for a COVID-19 Business Interruption Claim

Here are the eligibility requirements for a COVID-19 business interruption claim:

1. You operated a business at the time of the COVID-19 pandemic.

A business interruption insurance claim is filed on behalf of a business. In order to receive compensation for a COVID-19 interruption, you must have been in business at the time of the COVID-19 pandemic. If you're individually out of a job, filing for unemployment is probably the right path for you. In order to receive compensation for COVID-19 business interruption, you must have been in business and operational at the time of the pandemic.

2. There is a business insurance policy in place.

A business interruption claim is an insurance claim. To receive a payment, you must have an insurance policy in place. The insurance policy has to be something that is already in effect at the time that the pandemic occurs. It's not something that you can put into place after the fact. In order to make your claim, you must have a policy active and in force at the time that the disruption occurs.

3. You are unable to conduct business as usual because of COVID-19.

The next step in having an interruption claim is having a disruption in your usual operations. Of course, most businesses have had to make changes because of the COVID-19 crisis. Examples of disruptions might include the following:

Having to close completely for a period of time because of shutdown orders

  • Being unable to offer in-person services; being limited to carry-out or curbside only
  • Suffering a work stoppage because of a problem with a supplier
  • Not being able to distribute your product because of a problem with another business
  • The property is too dangerous to continue conducting business because of COVID-19
  • Closure because of an outbreak

The way the loss occurs and the reason that you can't do business may make a difference in your eligibility. However, these are just some examples of disruptions that may make you eligible for a business interruption claim.

4. As a result of the business interruption, the business suffers a loss in income.

Regardless of the reason for the disruption, to be eligible to file a claim, there must be a loss in income. If you're able to earn the same income despite having to change your business model, there is probably not a way for you to file a claim. The amount of your claim is reduced by anything that you can still earn, as well as other ways that you mitigate your losses. To be eligible to file a claim, you must have a loss in income that results from the disruption.

5. You can prove the losses in income that you have.

To substantiate a business interruption claim, you must have documentation of both the interruption and your losses. The insurance company isn't going to take your word for it. You need to have evidence of how much you deserve in compensation and why. In all business interruption claims, documenting your eligibility and the claim's amount is a critical part of the process. A business interruption attorney can assist you with gathering the evidence that you need to substantiate the losses.

6. The insurance policy covers the type of losses that you have.

A business interruption claim is based on the coverage in your business interruption insurance policy. The policy might be a catch-all for all situations. It might say something to the effect that all losses not otherwise specifically mentioned elsewhere in the policy are covered. Other kinds of business interruption policies limit coverage to physical dangers that make the property unusable. Still, other policies cover communicable diseases and the like but stop short of covering all situations.

Eligibility for a business interruption insurance claim depends on what language is in your insurance policy. What's in a business insurance policy and what's covered can be confusing. Experienced business interruption lawyers can give you an informed opinion about your rights.

Understanding Your Eligibility For a Business Interruption Claim

Because of the unique and personalized nature of a business interruption claim, it's important to evaluate your unique case personally and individually. Each claim gets decided based on its own merits. If you're frustrated by the response of the insurance company, don't give up. A business interruption lawsuit can be right for you. By working with business interruption lawyers, you have an experienced legal team to help you pursue your case until you receive justice.

Author's Bio: 

Tracy Cortez is a blogger for Adam S. Kutner, a personal injury law firm based in Las Vegas.