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COVID-19 affecting your business? Business interruption insurance could help

The COVID-19 pandemic has forced many businesses to temporarily close or shutter their doors indefinitely. If your business is suffering as the result of the coronavirus, filing a business interruption insurance claim with the help of an attorney could help you recover losses.

Posted Updated
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By
Latisha Catchatoorian
, WRAL Digital Solutions
This article was written for our sponsor, Whitley Law Firm.

In June, the United States Bureau of Labor and Statistics reported the national unemployment rate is 11.1 percent. While this is an improvement from the 13.3 percent unemployment rate in May, many employees and business owners are still suffering as the result of the COVID-19 pandemic.

The coronavirus has forced many businesses to temporarily close, alter their operations or shutter their doors indefinitely. And as daily reported cases continue to spike in many states across the country, including North Carolina, experts are anticipating a roll back of phased reopenings. These potential re-closures and the lingering effects of a workforce still trying to get on its feet will continue to have an impact on the national economy.

"Businesses have suffered significant financial losses due to various shelter-in-place and stay-at-home orders. Business interruption insurance is a way to cover some of these losses, but collecting a claim is easier said than done," said Matthew Bissette, an associate attorney at Whitley Law Firm in Raleigh.

Bissette works with the firm's clients who have disputes with their insurance companies during natural disasters and unprecedented circumstances such as COVID-19.

Business interruption insurance — what it is and who qualifies

Business interruption insurance is a type of insurance that offers protection for business owners if their business operations are halted due to an unforeseen disaster. It is different from property insurance, which typically covers the physical damage done to a business in circumstances of fire, storms or earthquakes for example.

Business interruption insurance offers more protection in that it can cover the loss of income that a business suffers during a disaster, such as a global pandemic like COVID-19.

Business interruption insurance is usually bundled in a Business Owner's Policy that includes other insurance coverages like commercial property and general liability.

Business interruption insurance policies vary, but typically cover things such as:

  • Fixed costs (like rent) and operating expenses;
  • Loss of revenue due to business closure;
  • Extra expenses required to maintain operations during or immediately after a crisis;
  • Moving expenses if the company needs to relocate (temporarily or permanently).

Many businesses have suffered financial loss and income as a result of having to close or alter their business operations amidst the pandemic. While the current circumstances are unprecedented, some policies may cover government-mandated closures of business premises (such as those mandated by the governors of states during the pandemic) that directly cause loss of revenue or civil authority ingress/egress (the right to enter a property and the right to exit a property, respectively).

"Many business owners are hearing from their insurance agents or brokers that their policy does not cover losses associated with COVID-19," Bissette said. "Before taking their word, business owners should fully understand the terms of their policy and how certain policy provisions may be interpreted. If they need assistance, a Business Interruption Insurance attorney would be happy to help."

If my claim gets denied, what do I do?
Collecting a claim during a disaster such as a hurricane, or in this case, a widespread pandemic like COVID-19, can be admittedly difficult. Six hospitality groups in Chicago, for example, sued their insurance companies over COVID-19 denials, alleging the insurers were finding ways around the process and denying payouts as a result.

"Many major insurance companies specifically named 'loss due to virus or bacteria' as invalid grounds for a business interruption claim as early as 2006, but state and federal lawmakers are considering laws that would require insurance companies to cover COVID-19-related losses," Bissette said. "The coronavirus pandemic is highly unprecedented, but it is sparking significant legislative change that could benefit businesses. If you file a claim that is denied, it doesn't mean it's the end of the road. While discouraging, a change in legislation or a lawsuit could bring you the compensation that you deserve and are entitled to."

Bissette said the best thing business owners can do during this time is:

  • Document losses;
  • File a claim;
  • Consult with an attorney.

An attorney can help review the fine print of an insurance policy and make sure you are going through the filing process correctly. Additionally, if legal recourse is needed, an experienced insurance lawyer could help get the compensation you need to navigate the uncertainty of your business brought on by the COVID-19 pandemic.

This article was written for our sponsor, Whitley Law Firm.

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