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Business Interruption Insurance

Business interruption insurance promises to pay the insured for the income that was lost during the time period of interruption resulting from disaster. While a fire insurance policy covers damage to a property after a fire, business interruption insurance compensates for lost income when a business must close down completely because of disaster-related damage. It also covers operating expenses, such as electricity, that must continue to be paid after the catastrophe. Insurance coverage can be triggered either because of an interruption to the business itself, or because of a closure of the insured’s supplier. Both types of business interruption coverage usually requires a “physical loss or damage” to property.

How Business Interruption Insurance Works:
• Standard time provisions on a business interruption policy are defined as the starting date of the peril, through the repair, and to the restored condition the loss.
• When filing a business interruption claim, a few supporting documents are needed. These documents include business expense reports, business revenue reports, details regarding business history, number of employees, and more.
• The basic business interruption claim formula is: Net Income + Continuing Expenses + Extra/Additional Expenses = Business Interruption Loss
• There are several elements to be inspected when handling a business interruption claim. Utility costs, payroll, taxes, and additional advertising are some factors that can be overlooked.

The types of Business Interruption Insurance coverages:
• Extended business interruption coverage pays for the income that is lost after the property is repaired but before the income returns to the pre-loss level.
• Contingent business interruption provides the insured with coverage for loss to the property of suppliers or consumers of its products or services. The latter two business interruption options are extensions beyond a basic business interruption insurance policy.
• Ingress/egress coverage applies when entry to or exit from a piece of business property is made impossible or extremely difficult.
• Services interruption is intended to cover for losses caused by inability to access vital services including communication, electricity, water, gas, air-conditioning/heating, or transportation of supplies.

Insurance Company Strategies to deny, delay or minimize your claim:
When an insurance provider denies coverage, this can lead to even more problems for the business owner. For example, most insurance policies require a waiting period before benefits begin to be paid. Issues arise when the insurer drags on this waiting period beyond a reasonable time. The longer this waiting period extends, the more damages pile up without any monetary relief. A safeguard for the business owner that may be found in a policy is the extended period of indemnity. This is meant to keep the insurer from cutting off payments after a business is able to reopen. Just because the business reopens does not mean that all is back to normal, and sometimes a business takes a long time to rebuild itself to its former capacity. Insurance companies sometimes attempt to circumvent this benefit by falsely inflating the business’s earnings after reopening. Disputes with the insurance company like these can be harrowing for a business owner to deal with alone on top of all the other difficulties.

For coronavirus (of COVID-19) losses, obtaining coverage will likely turn on the interpretation of the “physical loss” requirement in the policy. obtaining coverage will depend on the specific policy language.

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. We offer free business insurance claims consultations.