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Business Interruption – Are Your Losses Covered?

image - yellow sign we are temporarily closed due to coronavirus pandemicAs of the end of March, the global number of coronavirus (COVID-19) cases has risen over 740k, and mandatory government business closures have begun to hit more businesses everywhere. It's growing increasingly impossible to avoid the rising anxiety in the news, social media, and general populous as more people are adjusted well into their self-isolation. With businesses closing around the world due to the novel coronavirus, this pandemic has put everyone into uncertain times, and the scope of the potential losses to businesses is still unknown. 

What is the Potential Impact of COVID-19 on Businesses?

Experts are saying they are "hopeful" for an end to the global pandemic by the summer, but the keyword there is hopeful. There is no way to be confident in how this crisis will end, and with the number of coronavirus cases worldwide rising steadily every day, predicting an end to the crisis is still only spoken about in hypotheticals. Hypotheticals that, unfortunately, the experts all struggle to agree with each other in regard to. Even with the hopeful end arriving by this summer, businesses will still be left grappling with unprecedented losses for another few months at best. Estimates predict total losses are to range somewhere in the billions of dollars in the US alone. As such, whether or not these business closure losses due to coronavirus are insured is on the mind of many business owners.

Aside from updating internal policies and scrambling to protect employees and consumers, there is a lot of concern arising along with the rise of the coronavirus outbreak. The question of whether their insurance for business closure covers the outbreak of the coronavirus is an ongoing uncertainty for many businesses. As health officials work tirelessly to contain the virus globally, so far, there is no concrete end in sight and no answers on when normal life -- and by extension businesses reopening -- can begin again. Unfortunately, the answer to the question of whether your business losses are covered is more complicated than yes or no. As the scale of the global impact is still unknown, the answer is a lot harder to pin down than it seems on the surface.

Restaurant owner Thomas Keller made headlines this week for suing the Hartford Fire Insurance Company in hopes of setting a legal precedent for businesses facing government-mandated business closures. John Houghtaling, the attorney for Keller's business interruption claim, told CNN he "isn't convinced" that the insurance companies are going to cover their policies. He referenced a notice given by catastrophe litigation attorney Zelle LLP, which states that unless policies specifically outline non-physical damage coverage, it is unlikely that businesses will find relief in their policies. Of course, Houghtaling disagreed, but what that means for smaller companies is still left in uncertainty as Keller and his attorney fight to set a precedent. Successful claims for infection under the business interruption policy are uncommon, but with the coronavirus changing everything, it doesn't mean that business interruption claims are impossible.

How Business Insurance Works

Business insurance policies change due to many factors like company size and the number of employees, and many other factors that profoundly impact the coverage of your business. Generally, business insurance covers but is not limited to, third-party liability claims, malpractice insurance, product damage, property insurance, and vehicle insurance. In the case of a fire, for example, the business would file a claim against its property insurance. At that time, the damage will be assessed, and the company will receive an appropriate amount to compensate for the loss. Generally, these policies alone do not cover supply chain disruption due to a pandemic like the coronavirus, at least not on their own. 

When it comes to insurance of any kind, oftentimes, in the case of special, unprecedented circumstances, what you're covered for is hidden in the wording. Figuring out your coverage before filing for a business interruption claim without a third party can be exceedingly tricky, especially when the circumstances are as unchartered as a global pandemic. 

How Business Interruption Insurance Works

How does business interruption insurance work, and why should you consider looking for legal advice for your losses? Business interruption insurance policies are an add-on to business insurance and cover losses like profit, employee wages, taxes, and loan payments, along with a few other losses required to keep a business afloat when disaster hits. For example, if a natural disaster or other devastating event forces the relocation of your business, the insurance policy can help with the cost of resettlement under the business interruption insurance. The real issues that arise with a virus are in the nuances and wording of the losses that can be covered by your insurance policy; there is often some "proof of the physical damages" requirement to be covered. Thus, because there can be proof of the physical loss of data, cyber-attacks can be covered. However, whether or not evidence of your business losses because of a mandated government closing may not be put explicitly into the wording of your policy, as the litigation attorney previously stated. Thus, there could be room to dispute the policy on both sides.

What these business interruption insurance policies will cover in costs can vary drastically between policies, but as with any insurance plan, the power is in the details. The language in the policy and the circumstances of the claim can make a significant impact on whether or not you will be covered in the case of a global pandemic like the coronavirus. Thus, filing a business interruption claim is going to be challenging to do alone.  Consider consulting with a business interruption lawyer.

How Supply Chain Insurance Works

Even with the consideration of internal losses due to the coronavirus that would fit under business interruption insurance, that is hardly the only way the global pandemic is negatively impacting businesses. Additionally, what happens when your supply chain is disrupted because of circumstances outside of your control? 

There are countless other examples of supply chains being disturbed other than a global pandemic. Catastrophes like tsunamis, hurricanes, and anything else that you can think of can break a supply chain and leave businesses out of luck until the damage has been fixed. Ideally, a supply chain insurance policy should cover losses in income during the shortage and the revenue losses because of impacted output, among other damages, that a supply chain disruption could cause. Of course, both policies have the same issue of wording. Your policy could very well exclude floods, windstorms, or pandemics, depending on how the wording is used. Some claims may even be denied if the total ability to operate wasn't lost in the incident that broke your supply chain. The focus on the specific wording is why it is so important to get your policies looked over by a third party with knowledge of the systems and phrasing, a business interruption lawyer. 

 

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Why You Need a Business Interruption Attorney

What can you do to ensure that you are fully prepared to handle whatever the coronavirus has in store for your business? There is only one surefire way to be sure that your insurance policy covers the losses that your business will, unfortunately, suffer throughout the coronavirus crisis. Gaining peace of mind that you are fully informed of what your insurance covers is possible through consulting a business interruption attorney

There is no better way to ensure that you are supported through this uncharted territory than having your policy reviewed by a professional. Additionally, the business interruption attorney is there to help you, and they will have your business and rights as their top priority. Trying to tackle this without the help of a third party could mean that your insurance company is able to find a way to wiggle out of part of your business interruption claim. Seeking the aid of a business interruption attorney to review your policy can help you better understand what you're entitled to from a more objective view of the insurance policy between the insurer and yourself. You want the highest payout you can get, but your insurer might want the opposite, and having a third party who understands the legal language can ensure a fair settlement. Thus, it's encouraged and advised that you maximize your ability to support yourself by reaching out to a business interruption attorney to review your insurance policy. 

Essentially, the coronavirus is uncharted and complicated territory; from its global health impact, all the way to the insurance business interruption claim uncertainties. With no end in sight for when life will return to normal, it's imperative that you act soon in sorting out your insurance policy and reach out to a business interruption attorney.

Call today for a free business interruption insurance policy consultation with an experienced business interruption attorney: 954-951-0000

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