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Business Interruption Insurance

Business interruption insurance promises to pay the business for income that was lost because of the disaster. While a specific disaster-related insurance policy, such as fire insurance, provides compensation for damages caused by a fire, business interruption insurance provides compensation for the income that was lost as a result of the disaster. Sometimes, it may cover operating expenses such as water, electricity and other things that need to be paid while the damages are being repaired. Insurance coverage can be triggered either because of an interruption to the business itself, or because of a closure of the insured’s supplier.

How Business Interruption Insurance Works:
• Standard time provisions generally begin on the day the tragedy occurred and go throughout the time period in which the repairs are taking place.
• To file a claim, a business owner must provide several documents including expense reports, revenue reports, number of staff and more.
• The formula used to calculate the loss of a business after a tragedy is generally standard. It is: Net Income + Continuing Expenses + Extra/Additional Expenses = Business Interruption Loss
• It’s easy to overlook important factors such as payroll, taxes and additional advertising when filing for a business litigation claim, but business owners should know that they can, and should, be compensated for these expenses.

The types of Business Interruption Insurance coverages:
• Extended coverage: This usually provides compensation that is lost while damage is being repaired until the business’s income returns to where it was prior to the disaster.
• Contingent coverage: This usually provides the business with compensation for the property that was lost and for the providers of services that may have been affected.
• Ingress/egress coverage: This usually applies when the damage caused by the disaster makes entry into a business or exit from a business impossible or incredibly difficult.
• Services interruption coverage: This usually provides compensation to for losses accredited to the inability to use a specific services such as electricity, air-conditioning, water, gas or a similar matter. It may also be used when the transportation of supplies is made impossible.

Insurance Company Strategies to deny, delay or minimize your claim:

A denial of coverage can lead to more problems. Even if the insurer agrees to pay the amount owed, the waiting period before the benefits begin to be paid can last months. The longer this waiting period goes, the more difficult it can be for businesses to recover. When deciding on what insurance policy is right for them, business owners should seriously consider looking for a policy with an extended period of indemnity. This will prevent their insurance carrier from cutting off payments after they’re able to reopen.

Even after a business reopens, it may take a long time to fully recover financially. Unfortunately, insurance companies may attempt to circumvent the benefit of extended period of indemnity by falsely inflating the business’s financial success shortly after they reopen. This often leads to disputes that can be difficult for a business owner to cope with while they’re still trying to get back on their feet.

For coronavirus (of COVID-19) losses, disputes arise related to how “physical loss” is interpreted within each individual policy.

If your business interruption insurance claim was denied after a disaster that forced the closure of your business (like Coronavirus or COVID-19), then contact us to discuss your case.