COVID-19 and ‘Business Interruption’ Insurance
Know What Your Policy Covers
By Ryan Scheck
As the economic disruption of the COVID-19 pandemic continues and businesses are losing billions of dollars in revenue, business owners are looking to all possible sources for help, including their insurance policies.
Business insurance policies differ significantly in their coverage, depending on your industry and your specific company’s needs. While some policies cover losses incurred during “business interruption,” the circumstances for which the coverage applies may be limited.
To learn whether you have insurance coverage that will help recoup some of your losses during this unprecedented economic crisis, take a look at our recommendations.
We Recommend the Following:
Contact your insurance agent or insurance company to see if you have coverage for business interruption. Request a complete copy of your insurance policy. (The one you have on hand is likely a partialpolicy). You may need to make the request in writing to your insurance agent or insurance company. Make sure you ask for a certified copy of your policy including all endorsements, which will include every clause, provision, exception, and inclusion.
Read the policy carefully. Look for the words “business interruption,” “ordinary payroll,” and/or “contingent extra expense” coverages. All business interruption insurance policies differ as to specific coverage and coverage varies by insurance company. The key definition in the policy that will determine eligibility for coverage is the “cause of loss.” Many business insurance policies exclude events with such causes as war, terrorism or disease, so they will likely not cover losses related to the COVID-19 pandemic.
File a claim. Talk to your agent about filing a claim even if you are not sure the insurance company will pay. Discuss with the agent the exact circumstances of your business’ losses. Is your business closed because the customers sheltering at home, or because it is subject to a shutdown order by the state or your municipality? Many policies have restrictions related to actions of civil authorities that impact your business, so that may impact your claim. But you may have unusual costs related to the shutdown that may qualify for coverage, such as cleaning and disinfecting your property.
Create and save documentation and evidence of your losses. Documentation is important and will need to be provided to support a loss claim. This information will need provided after the loss period and would consist of lost profits or additional expenses incurred as a result of COVID-19. We recommend developing a timeline. When did your business flow start to decline? When were you forced to close? Did you make any large purchases of inventory before then? Itemize your income and expenses over that time period and document its comparison to the same time period over the past two or three years.
Adams Brown advisors can assist in quantifying and providing documentation for purposes of filing a claim for a business loss. Call us for any assistance you may need.