There might come a time when your business is forced to cease or significantly cut back operations, cutting off or severely limiting revenue without warning. This type of sudden closure or downturn can cause many problems for companies large and small, as it can be challenging to stay on top of your business expenses without your usual revenue stream. No matter how carefully a company has forecasted and budgeted, it can be difficult to plan for prolonged periods of lost income.
Fortunately, insurance coverage might help your company get through closures or downturns under certain circumstances. Business interruption insurance, which is often part of or an additional rider to your commercial property insurance policy, is intended to cover gaps in income due to the interruption of operations. This is a particularly important topic in the wake of the COVID-19 shutdown since many companies were forced to close their doors for weeks, if not months.
Should you file a business interruption claim? What happens if you filed a claim and received a denial? These are all questions for an experienced Mississippi insurance claims attorney.
What Does Business Interruption Insurance Cover?
Business interruption insurance coverage – sometimes referred to as business income coverage – is generally part of a commercial property insurance policy that provides benefits in the event of an unexpected business interruption. Generally speaking, closures must be due to the inability to use the physical space of the business due to some event or damage. This type of policy often applies following:
- Water damage
- Toxic leaks
However, these are far from the only circumstances that can lead to a business interruption claim. This coverage (and business interruption insurance costs) should provide benefits to cover several types of business losses, including:
- Lost profits
- Costs of a temporary location, if applicable
- Reasonable business expenses incurred continue operations and/or prepare for reopening
- Fixed costs
It is important for all business owners to keep close track of all possible losses during and after the closure period, so you can seek benefits for the full amount your company needs.
Business Interruption Insurance Claims Tips: Review Your Policy
As with any type of insurance policy, business interruption policies can have numerous exclusions. It is important to carefully review your policy – or have an experienced attorney review the policy – to know whether you might have a viable claim.
Most business interruption policies only provide coverage following “direct physical loss or damage” to the property covered. While this tends to follow disasters, it might be possible to satisfy this element if the property is contaminated. Some policies contain exclusions that attempt to deny coverage if bacteria, communicable disease, or a virus caused the closure, such as in the case of COVID-19. Other policies have riders that expressly include coverage for such losses. Your chances of a successful claim largely depend on the language of your policy, the law in your State, as well as fact-specific determinations by your insurance company with the policy wording in mind.
Time is Short – Submit Your Claim Right Away
There is an ongoing debate about whether and/or to what extent business interruption coverage covers losses related to COVID-19, and we are already seeing litigation on the matter. However, when claiming business interruption insurance, you should not wait until the issue is settled to take action, however. Many business interruption policies have strict time periods during which you must notify the insurer of the loss and file a claim.
You should not wait to notify your insurer that you plan to file a claim, or to begin preparing the claim and building your case. An insurance claims lawyer can help you gather the information you need to support your claim and the losses you incurred. Do not delay in submitting a pandemic business interruption insurance claim and taking other proactive measures, even if you are uncertain whether the claim will be successful.
What Should You Do if Your Claim was Denied?
Many, many business owners have received denials of their business interruption insurance claims due to COVID-19 closures. Insurance companies are claiming that as a virus, Coronavirus does not qualify as physical damage to a property that prevents operations, so losses related to the virus should not be covered. These policies also do not cover losses from general changes in the market or the economy. You should never accept a denial letter from an insurance company without first discussing your options with the right insurance claims attorney.
Some small business interruption insurance claims are denied due to a lack of documentation provided with the claim, and you need to provide such information to turn the denial around. Other denials are based on policy language and exclusions, and if policy language might be interpreted in different ways, Mississippi insurance law generally construes the wording in favor of finding coverage for the insured. Other claims are simply denied in bad faith, as the insurer never intended to provide the coverage you paid for in the first place.
In short, there are many ways to go about appealing a denied insurance claim, including claims for business interruption and income loss. Remember that an initial denial is not always the final say, and an attorney can help to present a strong case for your appeal.
Insurance Claims Due to COVID-19
If you have lost business income due to the Coronavirus pandemic, you might have some difficulty getting benefits from business interruption insurance. The Mississippi Insurance Commissioner even issued a memo advising that this type of coverage might be a struggle for many policyholders.
There are other types of coverage that might help, however, including:
- Civil authority coverage – This provides coverage of lost income when the closure is mandated by civil authorities, and in many cases does not have to involve property damage.
- Contingent business interruption coverage – This provides benefits if your business cannot operate because essential suppliers and other partners are unable to operate, which disrupts your business.
If you have any type of coverage that may apply, it is worth it to discuss your options with an attorney who can review all of your policies and advise you of your rights.
Contact a Mississippi Insurance Claims Lawyer for More Information
At Van Cleave Law, we know that the COVID-19 crisis has affected many businesses and consumers alike, and we are ready to help provide guidance and assistance during the insurance claims process. Call 228-432-7826 or contact us online to speak with a member of our team and discuss a possible case today.