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Is Coronavirus Covered by Business Interruption Insurance?

The outbreak of novel Coronavirus (COVID-19) has severely impacted health and safety worldwide with potentially fatal consequences. In the state of California, a “shelter in place” order has been mandated, forcing millions of residents to stay at home as much as possible — only leaving the house for essentials. Unfortunately, state mandates like this have also had a profound effect on businesses in the state, forcing companies to reduce operations or shut down entirely for an indefinite amount of time.

Companies can typically rely on business interruption insurance to recoup lost revenue or operating expenses in the event that operations are reduced or stopped altogether. However, pandemics such as COVID-19 are usually so unprecedented that it can be difficult to know whether or not you are eligible to recover compensation based on those grounds.

If you have questions about business interruption insurance and Coronavirus, please contact Bentley & More, LLP immediately to discuss your situation. We have dedicated California business interruption insurance attorneys who understand what is eligible under business interruption insurance policy. Additionally, we can also fight for your right for compensation if your provider acts in bad faith and rejects your insurance claim, even though it is valid.

Can My Business Qualify for Business Interruption Insurance?

You may qualify for business interruption insurance if:

  • Your business has significantly reduced operations
  • Your business has been forced to shut down
  • You have had to fire staff and other essential workers
  • Your business has had to significantly alter normal operations to comply with state mandated orders
  • Your business and/or staff may have been exposed to Coronavirus and you spent time and money to disinfect, clean, and otherwise get your company in proper working order

If any of these apply to you or your loved one’s business, please contact us immediately so we can get to work for you.

Is Coronavirus Covered by Business Interruption Insurance?

Determining whether or not Coronavirus is covered by business interruption insurance is a complicated question. It may depend on a number of different factors, including:

  • The type of business
  • Your provider
  • The type of policy you carry
  • The verbiage in the policy regarding business interruption coverage
  • How your business was impacted by COVID-19

Overall, this is a difficult question to answer currently because the Coronavirus pandemic is an unprecedented circumstance for most, if not all, policyholders and providers. Generally, a property commonly qualifies for business interruption compensation given one or more of the following requirements:

  • A business’s operations must be suspended due to direct physical loss of or damage to the insured’s business property.
  • There is a prolonged suspension of business operations for a set period of time.

In most cases, “direct physical loss” is defined as actual loss of the property due to physical damage — such as that from a natural disaster, e.g. earthquake or fire. Whether the presence of COVID-19 counts as direct physical loss may ultimately be up to policyholders to argue for.

Additionally, the definition of “suspension of business operations” may be up for interpretation as well. Some providers define that to mean a complete ceasing of all business operations altogether, while others may mean a reduced ability to fully operate a business. For many of the food service establishments who have switched from dine-in to takeout only, this may be a key point of contention in seeking compensation through their business interruption insurance coverage.

Because such policies may be up for a wide variety of interpretation, it is highly recommended to consult an insurance lawyer first before filing a claim.

What Constitutes Insurance Bad Faith?

Insurance bad faith occurs when a claim that should, by all accounts, be paid out is rejected or otherwise disqualified for a seemingly questionable decision. It may occur more commonly in standard claims for business property policies, but it can still happen regarding business interruption insurance.

Because the written policies around business interruption insurance are fairly ambiguous and open to interpretation, providers may summarily reject any claims for a number of potentially invalid reasons. Additionally, because COVID-19 is an unprecedented sudden event, there may not be any language within a policy to either qualify or disqualify closures and suspensions due to it.

Therefore, it is always recommended to consult an experienced insurance attorney before filing a business interruption insurance claim. At Bentley & More, LLP, we can assist you in navigating the business interruption insurance claims process so that your compensation is not rejected in bad faith.

Contact Us If You Have Questions Regarding Your Insurance and Coronavirus

The impact of the Coronavirus outbreak is significant, and we understand that you and your business may be struggling during these difficult times. If you have any questions regarding business interruption insurance, please contact us today and we will try to assist you to the best of our ability.