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Businesses have suffered significant financial loss due to various Stay at Home and Shelter In Place orders amidst the COVID-19 pandemic. Business Interruption Insurance is an essential way to cover these losses, but collecting a claim can be easier said than done.

What is Business Interruption Insurance?

Business Interruption Insurance is protection for business owners in the event that operations are halted due to unforeseen disasters. It offers more protection than property insurance, which only typically covers the physical damage to the business. In the event of a storm, earthquake, fire, or any other event that requires the business to close and/or lose money due to recovery expenses, business interruption insurance could cover various financial losses stemming from that event.

While policies may vary, it typically covers losses like:

  • Loss of revenue due to business closure
  • Operating expenses and other fixed costs
  • Extra expenses necessary to maintain operations during or immediately after a crisis
  • Moving expenses if the business needs to temporarily or permanently relocate

These policies may also coverĀ civil authority ingress / egress, or government-mandated closures of business premises that directly cause loss of revenue.

What happens when my claim is denied?

During widespread disasters much like the COVID-19 pandemic, collecting a claim can be more difficult. Around the country, hospitality groups have been suing insurance companies who are allegedly finding loopholes to deny coverage.

As early as 2006, many major insurance companies specifically named “loss due to virus or bacteria” as invalid grounds for a business interruption claim, but state and federal lawmakers are considering bills that would require insurers to cover COVID-19 related losses.

This global pandemic is highly unprecedented, but it is sparking significant legislative change. Business owners should document their losses, file a claim, and consult with an attorney to review the fine print of the insurance policy. A claim denial may be discouraging, but a lawsuit or change in legislation may impact your coverage.

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