Most businesses have suffered losses from closures related to Civil Authority Orders and/or Covid-19 Virus on their premises. Many insurance companies are denying coverage to those businesses. The following checklist is intended to help you determine if you have a loss, what steps to take and things to consider if your claim has been denied.
Do you own a business with an insurance policy which contains business interruption/extra expense coverage?
- Not sure? Read your policy, call your agent, or your company and if still unsure have an insurance professional such as an adjuster or attorney review your coverage with you.
- If you have business interruption/extra expense coverage put your carrier on notice with a simple letter stating you are putting it on notice of a potential claim. Ask for your full policy and a list of any requirements you might need to comply with.
Whether you have business interruption coverage or not consider the following suggestions:
- Determine if your business suffered either a decrease in net profits or an increase in losses as a result of Civil Authority closures or COVID -19 on your premises. Look at the first month of the closure then the full time of closure and compare it to the same period last year to determine whether you might have a loss. Still not sure, call your accountant or an insurance professional such as an adjuster or attorney.
- Determine the amount of your possible loss and document your loss with records such as receipts, profit and loss statements, relevant communications from customers or officials and anything else which might potentially help in demonstrating a loss.
- Document any extra expenses you may have incurred in mitigating your loss of profits such as special advertising or other expenditures designed to minimize your loss.
- Document the Civil Authority Orders which necessitated your closure.
- Take photos of your closed business and those around you.
- If COVID-19 on your premises forced closure or required cleanup, document the events and save all proof of closure and expenses.
Should you make a claim?
- If you have business interruption insurance coverage and you believe your business suffered a significant decrease in net profit or increase in loss and you can prove it then consider making a claim with your insurance company. Your claim may be denied or you may receive a reservation of rights or non waiver agreement while your insurance company investigates your claim. If your claim is accepted and you are paid for your loss. Congratulations!
- If your claim is denied or if after 30 days your claim is not accepted consider consulting with an insurance professional or insurance coverage attorney.
Things to consider when people tell you there is no insurance coverage for the current pandemic:
- Many policies will contain a virus exclusion and some have pandemic exclusions. Does your insurance company issue pandemic exclusions? If so, and your policy only excludes viruses you may be entitled to coverage.
- Many policies allow limited coverage for Civil Authority closures subject to certain conditions. COVID-19 can cause illness but it also causes property damage. Many Executive Closure orders acknowledge that COVID-19 causes property damage. If your closure was due to an Executive Closure order and you have Civil Authority coverage you may have a covered loss for a limited amount of time usually 30 days.(See our Blog – Business Interruption Coverage: Recent Developments)
- Did your insurance company discuss your coverages with you or tell you about virus or pandemic coverage or exclusions? Your company may not have a duty to review all your coverages with you, but if you were told about your coverages or you asked what was excluded and you thought you were covered for a pandemic you might have a claim.
- Did your policy always contain a virus exclusion or was it added when the policy was renewed? If it was added at a later date, did you receive notice of the change?
- If your policy has a virus exclusion is it clear, does it extend to all coverages and does it include a pandemic? At the minimum you might have 30 days of coverage under the Civil Authority portion of your policy.
Lawsuits have already been initiated seeking coverage for business interruption claims and extra expenses incurred. If you believe you have a covered claim which has not been accepted consult with an insurance professional.