What is Business Interruption Insurance? Does it Apply to the Covid 19 Shutdowns?

Mark Wolfe, Attorney at Law
mark@brwlawyers.com

Business Interruption Insurance or also known as Business Income Insurance is an added coverage found in a business property insurance policy or as part of a comprehensive business operations policy.  Business interruption insurance can compensate businesses for lost revenue, rent and lease payments, mortgage payments, other loan payments and taxes. Employee payroll may be covered, along with costs of having to relocate temporarily or permanently to new premises.

The key is that this coverage is derivative from a covered loss under the insurance policy and it is an “add-on” coverage that is paid for in the premium package. It is generally not a stand alone coverage. The business must suffer a covered peril that results in an interruption to normal operations so as to trigger this coverage, if it is part of the policy.

A similar example of a derivative coverage that can be “added on”can be found in your automobile policy. As part of the collision coverage or comprehensive coverage you may have added “rental car insurance” for an additional premium cost. If your car is damaged in an accident (collision coverage) or burns up in a fire (comprehensive coverage), your rental car insurance will pay for a rental car until the property loss is adjusted and paid.  If your car becomes un-driveable for some other reason not covered under the auto-insurance policy you can not use your car rental coverage.

This is also the way business interruption insurance works. If it has been added-on to the policy, the loss must be derived from a covered loss. Herein is the problem for many business owners suffering under the Covid 19 business shut down, the loss is most likely not from a covered peril. In fact, some business insurance policies have specific exclusions for damages related to or caused by a communicable diseases or pandemic.

However, if you are not sure whether or not you have this type of coverage or even if you don’t think you have a viable claim, you may want to consult with an experienced insurance claim lawyer. Business insurance policies are complex and they vary greatly from business to business. They can often be vague or ambiguous in definitions of covered losses and benefits. These uncertainties under a policy may work to the claimants advantage so as to allow a business interruption claim.

If you would like a free consultation with Mark about your potential insurance claim, please email him at mark@brwlawyers.com or send a text to 251 533-9548 (cell). You can also call Mark directly at 251 410-7761.

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