León Cosgrove

COVID-19 Client Alert – Business Interruption Insurance

By: Derek E. León

We have been closely monitoring the COVID-19 situation to develop solutions to the challenges our clients may currently be facing during these uncertain times. While this is first and foremost a public-health concern, amidst travel restrictions, “shelter down” orders, municipal shutdowns, and employees being unable to come to work, we recognize that COVID-19 is also causing a great economic toll on some of our clients’ businesses.

Some companies may be able to recoup lost profits and expenses sustained due to COVID-19 if they have business interruption (BI) insurance. BI insurance serves to cover losses of business income caused by various disasters and other occurrences. This generally includes when a business cannot operate or is shut down. BI insurance compensates businesses for lost profits, continued operating expenses, and additional expenses required to continue operations, if even on a limited basis. Some BI policies specifically cover reduction in business income caused by customers avoiding the business due to a pandemic. BI coverage may be provided through a separately purchased policy, or it may provided as part of your property-insurance policy or another policy. Other policies, such as supply-chain disruption policies, may also provide similar coverage.

We advise our clients to, possibly in conjunction with their accountants, gather and retain the following information, which will be helpful in making a claim for BI coverage:

  • Business data from past years during the same period, such as revenue, profits, number of customers, etc.
  • Records of business operations (if any) during the business-interruption period, including revenue, profits, and numbers of customers.
  • Records of all operating expenses and new expenses required to adapt to the current situation and continue operations.

We have experience assisting clients with all types of insurance-coverage disputes including those related to BI insurance. We are familiar with the arguments insurance companies may make to deny coverage, especially in crises where they will likely face a barrage of claims. We are happy to review your insurance policies to advise whether you may have a claim for BI coverage or other insurance coverage related to losses arising from COVID-19. And if you have already made a claim and your carrier has denied coverage or delayed in providing its coverage decision, please give us a call to discuss how we can help.