Business interruption insurance is meant to compensate business owners for lost income due to a natural disaster or another event outside of their control.
The COVID-19 pandemic caused by the novel coronavirus has forced many business owners to turn to their insurers for financial assistance after being ordered to close their doors by local or state governments.
Below, we discuss some of the elements required to qualify for business interruption coverage.
#1. Physical Damage
The chief qualifier for business interruption coverage is whether a business sustained physical loss or damage. However, courts have held that physical loss or damage goes beyond simply structural damage to the property. The inability to use a property for its intended purposes can also constitute physical loss or damage.
In this case, your insurance policy may compensate you for lost income if you and your employees were forced to vacate the premises due to disaster-related damage.
#2. Civil Authority Coverage
Some business interruption insurance policies include civil authority coverage, which compensates you for lost business income when your business is closed by order of a government entity.
Since the inception of the coronavirus pandemic, approximately 24% of small businesses in the United States have been forced to close. In this situation, civil authority coverage may benefit business owners.
#3. Microorganisms
After the SARS outbreak in 2003, many insurance companies specifically excluded damage caused by microorganisms from their policies. However, it’s important to keep in mind that the language in these policies is nuanced, and it’s in your best interest to speak with an experienced attorney who can work to get your claim approved.
For example, some policies only exclude damage done by viruses or bacteria, not both.
Will I Still Qualify if I Stayed Partially Open?
The bottom line is: it depends. Most businesses have been forced to cease some aspects of their operations. Some businesses, for example, are operating on reduced hours or are fulfilling orders from home or from a satellite location.
Therefore, it may be argued that the damage caused to your business by the coronavirus pandemic has been enough for you to incur significant losses. In this case, you may be eligible to receive compensation from your insurer.
Again, it’s important for you to speak with one of our experienced attorneys who can carefully review your policy. At this time, The Ammons Law Firm is offering a free, “no-risk” review of business interruption insurance policies for businesses that have been closed during the COVID-19 pandemic.
Contact us today at (281) 801-5617 to schedule your free review.
