Can I File a Claim After Being Denied Business Interruption Insurance?

Small businesses have arguably borne the brunt of the economic devastation that has ripped through the United States in the wake of the COVID-19 pandemic. Though they make up more than 90% of all businesses in the country, few of them have received financial assistance during this time. For many, this denial of support has come in the form of rejected claims such as those filed for business interruption. If you have experienced a similar denial, you are not yet out of options. It is imperative to contact a business interruption insurance lawyer as soon as possible to ensure you get the coverage you need for your business during this devastating time. 

An Overview of Business Interruption Insurance

Business interruption insurance, (also referred to as “BI” or “business income” insurance) is meant to provide coverage for lost income as a result of a disaster or other unexpected halt to business operations. It is normally added onto a property or casualty policy or may even be bundled into a comprehensive package policy. Business owners can typically rely on this protection to address issues that are suddenly imposed on the business such as the relocation of office space, loan repayments, payroll complications, and taxes. 

Note that this policy is not exclusive to natural disasters, however. It is supposed to apply in instances of government mandates that require business operations to temporarily cease. Of course, the ongoing coronavirus pandemic should fall into under this definition, though many insurers are claiming that current events fall into a gray area. 

Denial of Business Interruption Insurance Claim

Numerous insurers are facing lawsuits as business owners seek protection from their insurance companies. In one such case against the Brayton Purcell firm, Gil Purcell argued in favor of the denials, saying that the business interruptions are “not virus-related. [Rather, businesses] are shut down because of the risk of it, acting on (the government’s) civil authority.” To many, the case is still black and white, as this falls under a government mandate that resulted in significant business interruption. 

If your claim has been denied on this basis, however, you can still ask the following questions to determine eligibility:

  • Did exposure to the virus or related safety restrictions result in physical harm to your business?
  • Does your policy include a virus exclusion clause?
  • Does current or proposed legislation extend coverage for losses caused by pandemics?
  • Is contingent business interruption coverage included in your policy? (This way, if your supplier was interrupted by the pandemic and this has impacted your business, you still qualify for coverage.)
  • Is civil authority coverage included in your policy (covers shutdowns ordered by local, state, and federal governments)?

Depending on your answers to these questions, you may qualify for a new insurance claim. Though many argue that business interruption insurance should be applied during this time, insurers are muddying the waters and claiming that there is a gray area where there seemingly was none before. Contact a reputable lawyer to determine your eligibility for a new claim, and to pursue legal action if your justifiable claims have been denied.