Business Owner’s Guide To Business Interruption Insurance Claims and COVID-19
Aug 24, 2021 | Category: COVID-19 |Business Interruption Claim Denied? Let’s Talk. When something beyond your control prevents your business from operating, the effects can be devastating. Many businesses have business interruption insurance to protect them when a disaster occurs. Business interruption insurance can compensate owners for business losses sustained while they are trying to get up and running again. Business interruption insurance has become a hot topic in the wake of the COVID-19 pandemic. Many business owners have been forced to close their doors or significantly scale back operations. Businesses suffering from financial hardship due to coronavirus are turning to their business interruption insurance for pandemic relief. However, insurance companies have been reluctant to cover losses based on coronavirus. If you are unsure whether business interruption coverage is included in your business’s insurance policy or what losses it covers, it’s a good idea to talk to an experienced Florida insurance claims attorney. Your attorney can help you review and interpret your policy and determine what coverage it includes. But to get you started, we have created this guide to help you navigate the uncertainty you may face in reviewing your insurance policy, filing a business interruption claim, and resolving your claim denial. What Is Business Interruption Insurance? The purpose of business interruption insurance is to cover losses to your business when it is unable to operate as a result of covered damage to your property. Repairs for property damage can be expensive. However, the losses you suffer from being unable to run your business during the repair period can be even greater. Especially if the repairs are going to drag on for a while, you may not be able to keep up with your overhead, employee salaries and benefits, or loan payments. Not to mention the profits you will lose during that time. To make a claim, you must generally show: There was physical damage to your property The damage was caused by a covered event The damage is the reason you had to shut down operations Your financial losses resulted from the shutdown If you meet these requirements, you can make business interruption insurance claims in Florida that will help you keep your head above water until your business can reopen. What Is Covered by Business Interruption Insurance? The events covered by business interruption insurance depend on the terms of your individual policy. Covered events may include: Fire Water damage Flooding Storm damage Earthquakes Vandalism Equipment failure Contamination Ordered shut down by civil or military authorities Your loss of business insurance policy likely contains exclusions outlining specific events that it doesn’t cover. For example, your policy may exclude floods or earthquakes if you have not added additional coverage to your policy. Some policies also exclude closures based on pandemics or contamination. Your policy may require a waiting period before you can make claims for certain events. For example, your policy may require your business to be shut down for a minimum number of days before it will cover losses for things like power outages or a shut down by a civil authority. Terms can vary from policy to policy, so it’s important to review the specific terms of your policy to determine what it covers. If your insurance company has denied a business interruption insurance claim, an insurance claims attorney can review the terms of your policy to determine what options you might have to fight the denial. What Financial Relief Can I Get from Business Interruption Insurance Claims in Florida? Business interruption insurance typically covers losses incurred during the “period of restoration.” This is the time it should reasonably take to repair or replace the damaged property. Policy-holders may be able to purchase additional coverage that extends for some time beyond the restoration period (say, 30 days). This gives the business a little extra time to get back on its feet. Business interruption insurance claims in Florida may cover many of the following losses. Loan Payments Business interruption insurance can help you keep up with your small business loans and other loan payments while your business is shut down. Mortgages and Leases Loss of business insurance can cover the cost of mortgage or lease payments for your premises while your business isn’t operating. It can also cover leases on equipment. Utility Bills Ongoing monthly costs for things like phone service, water, and electricity may be covered by your business interruption insurance until your premises are repaired. Relocation Expenses If you need to move to a new location either temporarily or permanently, your insurance may cover moving expenses. Your insurance can also pay for temporary costs associated with operating out of a new location, such as temporary rent. Lost Revenue or Lost Profits Business interruption insurance should compensate you for income that you would have been able to earn if you had been able to continue operating your business. There may be different ways to calculate this, depending on the terms of your policy. Some policies consider gross revenue, while others consider lost profits. Records of your earnings in previous months and years can be very helpful in demonstrating your losses to the insurance company. Employee Wages and Benefits If a disaster forces you to close your business, you may not be able to pay employee wages or benefits. Business interruption insurance can help you keep up with your obligations to your employees. Taxes Even though your tax obligations will likely decrease when you are forced to close your business, you will still have some tax liabilities. Perhaps you were counting on revenue in the next quarter to pay your income taxes for the year or to pay a property tax that is coming due. Business interruption insurance can help make sure you can pay your taxes when you aren’t bringing in revenue. Why Would Business Interruption Insurance Deny Coverage? An insurer may deny your business interruption claim if it determines that your loss or its cause was not covered by your policy. The best way to determine what your business interruption insurance does and doesn’t...
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