Business Insurance Policy and Pandemics

Business interruption insurance is a common type of policy that covers the loss of income that a business suffers after a disaster. The income loss covered may be the result of a disaster-related closing of the business facility or due to the rebuilding process after a disaster.

Such a policy is designed, at its core, to help businesses cover bills, rent, and utilities, replace lost income and cover payroll when a covered event forces a business to close temporarily. This sounds pretty straightforward, right?

A global pandemic certainly qualifies as a disaster on a general level, and of course, it is forcing millions upon millions of businesses to close temporarily. We just don’t know how long “temporarily” is.

As is often the case though the insurance industry seems to be one step ahead of us. Insurers recognized the financial impact such a health crisis could have on its bottom lines. The Washington Post reported on April 3 that insurers knew about the economic damage that a global pandemic could force upon its collective bottom-lines based on lessons learned from the 2002-2003 SARS outbreak. So many business interruption policies were written to exclude losses suffered from pandemics or serious health crises.

Even for policies beyond business interruption, the insurance industry appears to be preparing for a battle with politicians and the business community on coronavirus-related coverage, Politico reported on March 26. The fine print of business interruption policies specifically can be either misleading or direct. According to this Daily Beast article on March 28, viruses generally aren’t covered. One particular line penned by the article’s author Dean Obeidallah would be funny if it wasn’t so true:

“You lose! Good day, sir!” is exactly what insurance companies are now telling small-business owners based on an exclusion in the policy called—wait for it—the “Exclusion for Loss Due to Virus or Bacteria.”

One group of famous chefs including Wolfgang Puck and Thomas Keller has even reached out to the White House to urge action that would force insurers to accept insurance claims from the restaurant industry related to COVID-19. The expectation is that the courts could be dealing with lawsuits for months – and maybe years – as this pandemic eases.

So what can you do? If you have a business interruption policy, or another type of policy where business costs are supposed to be covered if your business operations are forced to be suspended as a result of a natural disaster, not under your control, get a copy of the language and contact Bashore Green. We can work with you to determine your next steps and whether you may have a case to get payment directly from your insurer. Chances are you may have to fight for your money and we can be the partner who can help.

Contact us now as our team is working remotely. Remember, we don’t get paid unless you get paid. We’ll help fight for your business so you have the resources needed to continue operations when this closure ends.

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