Can You Fight a Coronavirus Business Interruption Claim Denial?
Local governments across the nation have issued “shelter-in-place” orders to combat the spread of the coronavirus. This extraordinary action has placed a severe financial burden on non-essential businesses that have been forced to close during this crisis. To alleviate the economic strain, many business owners have filed business interruption insurance claims. Unfortunately, a large number of those claims have been denied. The Reiff Law Firm’s Philadelphia coronavirus business interruption claim lawyers explain how you might be able to fight these kinds of denials and work to get the coverage you need.
Business Interruption Insurance in Pennsylvania During Coronavirus
A business interruption policy is typically an additional insurance policy attached to your general property damage and liability insurance. A business owner will file a business interruption claim when the operation of their business is suspended for a prolonged time due to an unforeseen event.
When a business experiences property loss or damage that disrupts its usual operation, owners are often confused about the extent of coverage or compensation their business interruption insurance will provide. Typically, there are three types of insurance offered to business owners:
- Business interruption insurance is intended to provide compensation for lost income during the “period of restoration” or the reasonable time it takes to repair or replace the damaged property.
- Extended business interruption insurance compensates a business for lost income between the time the damaged property is repaired and the time income returns to its pre-event level. This period of time is generally limited.
- Contingent business interruption insurance will cover a business owner’s loss of income due to a disruption of supplies or services due to the physical damage of property owned by the supplier or provider.
Extended and contingent coverages are usually offered as extensions of an insurer’s regular business interruption policy. You should carefully review your policy to determine the full coverage provided and whether COVID-19 or other viral outbreaks would be covered.
Denials of Business Interruption Claims Filed for Closures Caused by COVID-19
Business interruption claims are generally triggered by actual property damage or loss that causes a business to suspend operations and causes a loss of income. For example, a yarn mill might close after a fire damages machines and compromises the structural integrity of the building. In this situation, business interruption insurance would likely compensate the owner for the loss of income while the building and machinery are repaired, along with any expenses that would regularly be incurred during operation.
However, the coronavirus is a significantly different event. Many insurers added terms to their policies after the SARS pandemic of 2006 that explicitly excluded global viral outbreaks or diseases from coverage. Business owners have been denied coronavirus business interruption coverage in Pennsylvania and across the nation by insurance companies citing those specific exclusions.
What to Do if Your Business Interruption Claim Because of COVID-19 was Denied
If your claim was denied, you should contact our experienced business interruption insurance attorney immediately. In preparation for a consultation, there are some documents you should gather.
- A copy of your insurance policy
- Payroll records for the previous year
- Bank statements and financial records that provide proof of ordinary expenses
- Any documentation that shows property damage or loss
When looking at denied insurance claims, a court will interpret ambiguous language in the insurance policy in favor of the policyholder. In reviewing this language and the provisions of your insurance policy, it is crucial to understand the defined terms in the policy’s language. Often “property damage” is defined as actual physical damage to the covered property. However, specific policies further define the term to include the “loss of use” of the property. Because of the mandatory closure of non-essential businesses in Pennsylvania, property that was necessary for the operation of a business has been rendered unusable and might be covered even without destruction or damage to the property.
Business interruption insurance policies are usually categorized by how they list the events, or “perils,” that are covered. A “named peril” policy will include a detailed listing of the events that could trigger a claim. If a viral outbreak is not explicitly listed, then it is likely any COVID-19 claim filed against such a policy would be denied. On the other hand, an “open peril” policy covers any peril that is not excluded. In this situation, if a policy expressly excludes events such as the coronavirus or other outbreaks, then a denial is likely.
Often, a policy that appears to have an expressed exclusion might also contain a contradictory provision. For example, many business interruption insurance policies state that they cover loss of income due to the actions of a civil authority or a government agency. During the COVID-19 pandemic, business operations are being disrupted by government orders. That means that one of these provisions might cover your case even if another clause says viruses are not covered.
Our seasoned attorneys will work to appeal your denial and challenge the insurance company’s decision. Fighting a coronavirus business interruption claim may be possible through telephone calls and letters or by providing further documentation and evidence as to why your claim should be paid. Other times, it might require further legal action or a lawsuit against the insurance company.
Call Our Experienced Attorney for Coronavirus Business Interruption Claim Denial for a Free Consultation
Many businesses have sacrificed income and prosperity to comply with government “shelter-in-place” and “stay-at-home” orders, and now they are being denied insurance benefits after paying years of premiums. COVID-19 has created a tidal wave of legal uncertainty that requires an experienced attorney for coronavirus business interruption claim denials. If a disruption caused by the pandemic has adversely impacted your business and you have been denied coverage through your business interruption policy, call the Reiff Law Firm at (215) 709-6940 for a free, confidential consultation.