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Business Interruption Insurance

Posted on June 15, 2020

What happens when a global pandemic shuts your company’s doors and cuts off your business income? Many businesses carry insurance for just such events.

Business Interruption insurance is a safeguard for businesses in times of crisis, when the future of the company is endangered, like in the event of a fire, hurricane or flooding. The coverage generally can be applied only in the event of property loss that causes the business to be shut down while repairs are done and while there’s no income. Some policies allow the company to recover additional expenses due to the loss of business.

Contingent business interruption insurance will cover lost income when the damage is on someone else’s property but interrupts your business.

Contingent Property Insurance or Dependent Property Insurance (a/k/a Supply Chain coverage) could possibly apply, depending on claims of property damage.

Civil Authority coverage may apply in times of nearby damage, generally a one to five-mile radius of the business. Some other types of business insurance include coverage for business interruption.
Regardless of your type of business insurance, your claim must be related to property damage to kick in.

However, some policies have an exclusion that disallows coverage for an interruption caused by an epidemic or pandemic. Others require a certain time frame for closure in order to trigger coverage. So it’s important to know what your particular policy covers – and doesn’t cover.

But what happens when the government shuts down “non-essential” businesses. What happens when your policy has contamination exclusions or doesn’t have specific communicable disease coverage? Some insurers are issuing blanket denials of claims.

COVID-19 has created a whole new ballgame in terms of business insurance. While legislatures debate bills mandating business interruption coverage for COVID-related cases, cases are making their way through state and federal courts to determine whether companies have coverage for their loss of income during quarantine. Several states, including Louisiana, have seen exceptions to the exclusions. Coverage may still be available for businesses whose policies do not include communicable disease coverage extensions or that have contamination exclusions for viruses.

Charbonnet Law Firm’s attorneys bring almost a century of combined legal experience and expertise to help clients navigate the issues related to business interruption and insurance coverage. If your insurance claim has been denied, we can help you take the next steps.