Partner at Charbonnet Law Firm LLC
Practice Areas: Car Accident, Personal Injury
When your business is forced to shut down because of an unexpected event like a fire, hurricane, or government order, the financial impact can be severe. Business interruption insurance is supposed to help during times like these. But for many business owners in Louisiana, getting that help isn’t so easy especially after COVID-19.
In this blog, we’ll explain how business interruption insurance works, why claims often get denied, what the law says, and how Charbonnet Law Firm, LLC can help if you’re facing a denied claim.
Business interruption insurance is designed to replace lost income when a business has to close because of property damage. This coverage is often included in a commercial property policy or available as an add-on.
If a fire damages your building and you can’t open for weeks, this insurance can cover your operating costs, lost profits, and even payroll during the shutdown. But the coverage only kicks in when the cause of the shutdown is something the policy covers explicitly—usually physical damage to your property.
Some policies also include extra expense coverage to pay for things like renting a temporary location while repairs are made. But this only applies if your insurance recognizes the event as a covered loss.
There are different types of business interruption coverage, each serving a unique purpose. It’s essential to understand which ones apply to your situation.
This covers lost income and ongoing expenses if your business has to close because of physical damage to your property. It’s the most basic and common type of coverage.
This type of coverage applies when the property damage happens somewhere else—like at a supplier’s warehouse or a manufacturer’s facility and that disruption affects your ability to do business.
Also called supply chain insurance, this coverage helps when someone else’s damaged property interrupts your business operations. For example, if your leading distributor’s building is destroyed, this policy may help cover your income loss.
If the government restricts access to your business due to damage in the nearby area, this coverage may apply. Usually, the damage must occur within one to five miles of your location. The policy must include a clause for civil authority, and the government’s actions must directly cause your income loss.
Even though many businesses carry interruption insurance, claims are often denied. Here’s why:
Many policies exclude viruses or bacteria, meaning they won’t cover losses caused by a pandemic. Others deny claims because there is no physical damage, which is usually a requirement for coverage to begin.
Sometimes, claims are denied because they’re filed too late or because the business can’t provide strong documentation to show their losses. If your policy doesn’t include a specific endorsement for something like communicable diseases, your claim might not be eligible at all.
These are just a few reasons why many COVID-related claims were denied. But courts across the country are now weighing in and offering some hope for business owners.
COVID-19 tested the limits of business interruption policies. Many businesses filed claims when they were forced to close, only to face rejections from their insurers. But some recent court rulings are challenging that.
The North Carolina Supreme Court ruled in favor of policyholders, deciding that Cincinnati Insurance Co. must cover the losses of 16 bars and restaurants that were shut down during the early days of the COVID-19 pandemic.
These cases show that courts are starting to examine how insurance policies are written and how businesses are affected. In some states, including Louisiana, exceptions have been made where policies didn’t clearly exclude pandemic-related losses.
If your claim has been denied, don’t give up. You can take steps to fight back.
Start by reviewing the denial letter carefully. It will explain why your claim was denied and what policy language the insurer used to make their decision. Next, look over your policy to see precisely what is and isn’t covered.
It’s also essential to gather all your documentation—income reports, tax records, communications with vendors, and any notices from government authorities. These will help build a strong case.
Finally, talk to a business interruption lawyer who understands how to challenge insurance denials. They can help you understand your legal options and file an appeal or lawsuit if necessary.
|
Reason for Denial |
Explanation |
| No Direct Physical Damage | Policies often require tangible property damage to trigger coverage. |
| Virus/Pandemic Exclusion Clauses | Many policies explicitly exclude coverage for communicable diseases. |
| Insufficient Documentation | Lack of financial records or proof of loss can lead to denial. |
| Delay in Filing Claims | Missing policy deadlines can forfeit coverage rights. |
| Lack of Specific Endorsements | Absence of endorsements for specific perils like pandemics limits coverage. |
With nearly a century of combined experience, Charbonnet Law Firm, LLC understands how insurance companies operate. They know how to read complex policy language, how to spot unfair denials, and how to take the next step if your business deserves compensation.
Their attorneys provide personalized guidance, reviewing your claim and working with you to create a strategy that fits your business’s situation. They serve clients across New Orleans and Metairie and understand the specific challenges local companies face.
It usually covers lost income, fixed operating costs, and temporary relocation expenses when a business is forced to shut down due to physical property damage.
Some policies exclude virus-related claims, but others may offer coverage under civil authority clauses or if the language is unclear.
You should review the denial letter, gather supporting documents, and consult with a lawyer to determine your options for appeal or legal action.
Maintain complete financial records, document all communications with your insurer, and file your claim as soon as possible with accurate details.
Yes, you can appeal. A lawyer can help review your policy and denial and guide you through the appeal or litigation process.
Business interruption insurance can be a lifeline during tough times—but only if your policy covers the event and your insurer honors it. As many businesses discovered during COVID-19, not all claims are treated equally. Understanding your policy, knowing your rights, and taking action when a claim is denied are key to protecting your business.
Charbonnet Law Firm, LLC will help you comprehend your options and proceed with confidence if you’re unclear about your coverage or have had a claim rejected.
With over 50 years of legal experience serving families in the New Orleans area and surrounding Louisiana communities, our firm takes pride in providing clients with personalized legal services tailored to individual needs.
