What Does Business Interruption Insurance Cover?

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Most businesses carry commercial property insurance, which covers loss and damage caused by covered events, such as fires, tornado, wind and other unexpected events. Under such policies, the insurance company provides funds to repair the property that was damaged by the covered event. But what if the unexpected event results in an interruption to the business? This is where business interruption insurance steps-in.

Business interruption insurance is often an add-on to an existing property insurance policy. Generally stated, if a property insurance policy covers a claim for a direct physical loss of, or damage to, an insured property, business interruption insurance covers the financial loss suffered from suspending business operations because of the unexpected event.

For example, a business might suffer fire damage, which would be covered under a property insurance policy. The business interruption insurance would then cover the loss of income suffered by that business from the suspension of operations caused by the covered event.

Insurance policies are written either to insure against a specific list of perils, or they are written broadly and then list events that are excluded from insurance coverage. When it comes to business interruption insurance, the specific terms of the policy, and the reason for the business being unable to operate, will determine whether coverage is available.

Like other insurance policies, there are limits to business interruption insurance. These limits can be in the form of a limited time period to restore business operations, a cap on the dollar amount of the loss and duties of the insured to mitigate its damages.

Even when an insurance company denies an insurance claim, a business owner still has options. Coverage disagreements often result in lawsuits to seek a judicial determination as to whether there is in fact insurance coverage for the claim. If a denial letter is received, it is important to have experienced legal counsel review the insurance policy and the claim.

Recently, the focus of business interruption insurance has related to the suspension of business operations due to the COVID-19 pandemic and government shelter-in-place orders. Over a thousand lawsuits have already been filed throughout the country by business owners seeking a judicial determination as to whether the pandemic and government ordered shutdowns trigger coverage under various business interruption insurance policies.

At Goldenberg Heller and Antognoli, our attorneys have experience reviewing insurance policies and helping business owners to understand their coverage, submit claims and, if necessary, pursue litigation to establish coverage. Contact us today to schedule your consultation. 618-656-5150

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