Can your insurance cover your business interruption due to COVID19?
While states and cities continue to implement more restrictions in an effort to slow the spread of the coronavirus, many business are suffering. While Amazon, Costco, Sams Club, H-E-B and other big box retailers are doing their best to keep items stocked and have increased sales during this pandemic, smaller businesses may face extinction.
If you own a business, pull your insurance policy now. You may have a special endorsement or rider that may help called business interruption coverage. A typical clause states:
“We will pay for the actual loss of business income you sustain due to the necessary suspension of your ‘operations’ during the period of ‘restoration.’ The suspension must be caused by or result from a covered cause of loss.”
Don’t get too excited, though, as the devil is always in the details. Generally, policies that provide coverage for the interruption of a business tie such damages to a “covered peril” or “covered loss”. While covered loss typically include fire, flood, theft, and (yes, I’ll say it) hurricanes, there may be some arguments that a national state of emergency may trigger coverage. Further, state, county, and city forced closures for places like restaurants may also provide a loophole for coverage.
Beware, though, that your policy may also include a “virus” exclusion. Over a decade ago, the insurance industry started implementing a specific exclusion for losses “due to virus or bacteria” that would bar any recovery from losses sustained by COVID19. Some states, like New Jersey, are already acting to pass legislation to force insurance carriers to cover coronavirus-related business interruption losses.
So much is unknown about not only the virus itself, but how long these restrictive measures will last. In the meantime, you can take the following steps to get answers:
Pull a copy of your full business insurance policy (including all endorsements, riders, and exclusions) or request a copy from your agent;
Contact us for a free policy review and consultation;
Comply with a national, state, county, and city restrictions;
Find alternative ways to keep your business going, including going “virtual”, offering curb-side pick-up, offering gift cards, or special “buy-now-use-later” promos;
Keep track of your potential losses including your mitigation efforts; and
Stay calm and keep hustling.
If the past few years have taught us only one thing, it is that we are resilient and there are opportunities for hope and kindness amid crisis. Dean Law Firm is here to help in any way we can.