Business interruption insurance can provide a lifeline if your business suffers an unexpected disruption due to a covered peril. However, getting your insurance company to pay up can be tricky, even when the event falls under the policy’s coverage. Insurance companies rely on crafty language and look for loopholes to avoid liability and protect their bottom lines. Here are some suggestions for submitting your business interruption claim and avoiding insurer pushback.
Business Interruption Coverage
Business interruption insurance, which is also called business income insurance, is a critical type of insurance for many businesses. Typically, business interruption coverage is bundled into a commercial property insurance policy or a business owner’s policy. Business interruption benefits are generally triggered when a covered peril causes direct physical damage to the insured property and this damage leads to the temporary suspension of business operations. Every policy is different, but covered perils commonly include fire, wind and wind-driven rain, theft, falling objects and lightning. Some policies cover closure by a civil authority, such as when a government order related to physical damage to a nearby property limits access to your property. Like all policies, business interruption policies have exclusions. Policies typically exclude perils, such as floods and earthquakes, which need to be insured separately.
Business interruption policies also generally exclude disruptions unrelated to property damage. This reality, coupled with the fact that some policies also explicitly exclude losses from viruses and other communicable diseases, caught many businesses off-guard during the pandemic. Most companies that submitted claims for COVID-related disruptions were unable to collect on their business insurance policies.
Covered Expenses
Business interruption insurance covers lost revenue, which is determined based on past financial performance. These policies also cover fixed costs, such as rent, loan payments, utilities and payroll, as well as reasonable expenses that the business incurs to relocate temporarily or otherwise mitigate the disruption, up to the policy limits. Some policies will have a waiting period, such as 48 hours or 72 hours, before benefits kick in. Coverage will generally extend until the date the damaged property is returned to its prior condition, up to the policy limits.
Filing a Claim
If your business operations are disrupted, review your policy carefully to understand the coverage you have and what exclusions, coverage limits and deductibles apply. If you believe you may have coverage, contact your insurance company immediately to notify them of the event and confirm the insurer’s procedures for filing a claim. Keep in mind that insurers routinely look for loopholes to limit, deny or delay claims, and it’s important to meet all insurer requirements and deadlines for submitting documentation and proof of losses. Your insurance company will typically send an adjuster to assess the damage and submit an estimate for your review. You will be required to provide certain records to demonstrate your business’s financial history. You also will need to document extra expenses incurred as a result of the disruptive event and present applicable receipts to the insurer. Depending on the circumstances, you may also be obligated to take steps to safeguard the premises from further damage. If that is the case, any applicable expenses should be documented and submitted with receipts to the insurance company for reimbursement. Once you have started the claims process, follow up regularly with the insurer to track the progress of your claim.
If your business insurance company has denied or is challenging your business interruption claim, contact Schwartz, Conroy and Hack, PC for assistance. We have the expertise and tenacity to make insurance companies keep the promises they make to you and your business.
