If your small business suffered closure or income loss due to government directives amidst the threat of coronavirus (COVID-19), then you may be eligible to file an insurance claim to cover operational and property damages depending on your business interruption policy.

The global pandemic has forced many businesses across different states to temporarily shut down operations. Consequently, many business owners immediately filed for insurance claims in hopes of curbing loss of income, avoiding business closure, and speeding up resumption of operations. Filing a claim for insurance is usually a straightforward process, but given the unique business situation brought by the pandemic, some policyholders are encountering disputes or have legitimate claims denied by their insurance providers. This is why it is imperative for companies covered by a business interruption insurance to understand its policy, possibly with the help of an attorney, before they file a claim. 

Insurance Coverage for Interrupted Businesses

business interruption claimTypically, businesses file insurance claims for infrastructure or physical damage that interrupt operations within a period of time needed for rebuild and repair. But aside from property damage, a business owner may also seek insurance from what is known as a “business interruption claim”. Business interruption insurance coverage is for an unforeseen catastrophe like natural disaster (earthquakes, fire, tornado, flooding, storm damage), or health crisis like the COVID-19, which impede or modify normal business operations. The insurance is usually added in businesses’ comprehensive commercial property policies and provide coverage for lost profits, operational expenses incurred, temporary relocations or closure, employee training, worker wages and compensation claims, business taxes, and loan payments. In rare cases, insurance may be purchased as a stand-alone policy.

Top Insurance Claims Amid the Pandemic

A business insurance policy would contain the specific areas of coverage, limitations, and exclusions when filing a claim. Due to the current global dilemma, it is expected that the majority of claims would fall under business interruption insurance. Some insurance carriers may or may not consider an infectious disease as tantamount to “property loss or damage”. Some business and property insurance companies may have even explicitly excluded coverage on losses due to a virus or bacteria in their policies, in which case, the claim may be limited to a supply chain insurance that covers disruption in deliveries or supplier properties.

Aside from business interruptions, claimants may also seek general liability insurance. This move will protect a company from personal injury claims within the work location and is usually sought by medical institutions, retail, and transportation groups. Another possible area for claim is an event cancellation insurance, which may cover threats for virus and disease outbreaks in the workplace.

How to File a Business Interruption Insurance Claim

After a disaster causes interruptions in business operations, a claimant must immediately notify its insurance company. Below is the insurance claim process generally followed by businesses:

  1. Review your full commercial policy. Read and understand the provisions, areas covered, and damages not covered in your insurance policy. Since company policies use technical jargon, it is recommended to contact your business lawyer or hire a legal professional. Insurers are responsible for providing their clients with full copies of their insurance policy.
  2. File an insurance claim. Submit your letter of claim notification to your company’s insurance agent. Make sure to substantiate your losses claim with information such as profit reports, ledgers on company expenses, and lease. 
  3. Wait for the insurance carrier’s reply. In most cases, your insurer will respond and inform you of the areas where you are eligible to get insurance. In some instances, claims of the insured business are denied as legitimate. Claim rejection in the insurance industry is often done by companies to save on money. If this happens, you may still protect your business by getting in touch with an attorney.
  4. Prepare claim documents. Insurance paperwork will include your business revenue loss and financial records, copies of lease, payments, receipts, business tax returns, or any other documents which prove that the policyholder encountered business modifications or faced closure.

Facing blockades in your business operations can prove to be financially challenging and may even lead to business bankruptcy or debts. In most cases, going through the business claims process with your insurance provider, guided by a legal professional, helps the company stay afloat and to resume its operations. This shows how important it is to not just file an insurance claim, but to file it diligently.

Is your business in Arizona on the brink of financial loss? Do you need professional advice while reviewing your insurance contract? You may want to speak to our lawyers. 

If your business is currently at a halt, you may consider hiring a business lawyer from Zolman Law. Their experienced business law attorneys can help you protect your company assets and review your business insurance policies. Contact Zolman Law now for a free initial consultation and get your business back on track.