Business Interruption

Business Interruption Claims Overview

Business interruption claims can serve as a lifeline, helping your business tread water when the unexpected strikes. These claims are designed with your business’s longevity in mind, ensuring you have the means to bounce back from significant setbacks. 

It is estimated that between 30-40% of small business owners carry business interruption insurance. A BOP (Business Owners Policy) is the most commonly purchased policy by small businesses and includes general liability, commercial and/or business property coverage, and business interruption insurance.   

What is a business interruption insurance claim?

Business interruption coverage is a safety net crafted to reimburse policyholders for losses incurred when they cannot operate due to substantial property damage. This can result from catastrophic events such as hurricanes, floods, fires, or other events that cause damage and create intangible obstacles that hinder business operations. Pandemics and mandatory evacuations are also reasons that some business owners file business interruption claims.

When disaster interferes with your business operations, resulting in considerable lost income, filing a business interruption claim can be beneficial and necessary. It represents financial determination, a step towards recovery, and a move to protect your and your employees’ livelihoods.   

Getting a lawyer from Alexander Shunnarah Trial Attorneys to help you with your business interruption claim or a denied insurance claim can help you through our:

Types of business interruption coverage

Business interruption coverage can often be broken into different categories.

Extra Expenses Coverage 

Extra Expense Coverage allows you to recover the necessary expenses you incur during the “period of restoration” that you would not have incurred if there had been no direct physical loss or damage to your property caused by or resulting from a Covered Cause of Loss.

An insurance company will pay the extra expense to (1) avoid or minimize the “suspension” of business and to continue operations at the described premises or replacement premises or temporary locations, including relocation expenses and costs to equip and operate the replacement location or temporary location, and (2) minimize the suspension of business if you cannot continue operations.  

Extended Business Income Relief 

Additional business income relief may be available if the necessary suspension of your operations produces a Business Income loss payable under your policy. Business interruption coverage like this is designed to provide financial coverage for the period while the cause of loss is remedied and the operations reasonably resume. However, Extended Business Income Relief does not apply to loss of business income incurred due to unfavorable business conditions caused by the impact of a Covered Cause of Loss in the area where the described premises are located.  

Insurers often argue that such coverage isn’t available since the continued loss is caused in part by the fact that all businesses are “ramping up,” and therefore, competition amongst each other, rather than the covered loss, is causing the slowed profits. Such an interpretation would defeat the purpose of such coverage and would be hotly contested in future litigation proceedings.  

Civil Authority Coverage 

Civil Authority Coverage applies when there is an order or action issued or taken as a result of (a) physical loss or damage or (b) perils insured against to property adjacent to the insured premises or within a certain distance thereof, which prevents, prohibits, or impairs access to the insured premises.  

When deciding whether Civil Authority is triggered, it is imperative to look at your state and local orders, which should state the purpose of the order.  

Civil authority coverage for business income begins 72 hours after the time of the first act of civil authority that prohibits access to the described premises and will apply for a period of up to four consecutive weeks from the date on which such coverage began.  

Civil Authority Coverage for Extra Expense begins immediately after the time of the first act of civil authority that prohibits access to the described premises and will end upon the later of 1) four consecutive weeks after the date of that action, or 2) when your civil authority coverage for business income ends.  

Business Income Coverage  
 
Business income coverage is for commercial property, covering loss of income suffered by a business when damage to its premises caused by a covered cause of loss slows down or suspends its operations. For such a claim to succeed, the “suspension” must be caused by the direct physical loss of or damage to property, and the loss or damage must be caused by or a result of a covered cause of loss.  

“Physical loss” or damage is “any impact on property which prevents the property from being used for its intended purpose, ” including contamination of bacteria. This definition puts the Coronavirus in play as something that may be able to validate a BIC claim. Insurance carriers can be expected to deny such coverage as most businesses cannot prove the actual presence of the virus on the premises; however, it will be argued that the fear of the virus’ presence is enough to invoke such coverage.  

Some insurance policies include an “exclusions” section to look out for, as well. Such sections seek to limit coverage depending on specific circumstances, often including things like bacteria or viruses. Such exclusions are not always present and not always an impediment to a successful claim. Therefore, despite the existence of such an exclusion, you should always consult an attorney and request that they review your policy to determine whether you may be entitled to compensation for your loss.  

Losses Related to Covid-19

COVID-19 caused businesses to suffer losses that are difficult to recover from. Commercial property policies typically require direct physical damage to provide coverage, which is challenging in a global health crisis. Standard policy exclusions for virus-related losses further complicate claims.  

An attorney from Alexander Shunnarah Trial Attorneys can help you examine your policy thoroughly to identify coverage beyond business interruption. Possible sources of recovery include civil authority coverage, business income, extra expenses, loss of attraction, or supply chain policies – each designed to mitigate specific losses.  

How Shunnarah Can Help When Your Business is Interrupted

At Alexander Shunnarah Trial Attorneys, we understand your critical challenges when unexpected events disrupt your business operations. Our experienced business interruption attorneys are here to guide you through the complexities of recovering your losses, whether due to natural disasters, pandemics, or other unforeseeable circumstances.

We are committed to helping you navigate these turbulent times with strategic legal solutions tailored to protect your business’s continuity and financial stability.