Temporary business closures due to civil authority orders or disasters such as fires and hurricanes can result in significant interruptions to business operations, causing income loss and other expenses. Under these circumstances, one of the best steps businesses can take to reimburse property damage and related expenses is to file an insurance claim for business interruption coverage.
Business interruption coverage is a type of insurance that can help business owners recover losses suffered in the wake of a disaster, provided the reason for business interruption is a covered peril. For businesses that are small or just starting out, this type of insurance can be crucial in order to avoid permanent business closure and severe financial loss.
At Florin|Roebig, our business interruption insurance claims lawyers are committed to ensuring that businesses who hold this type of insurance can receive the compensation they need from their insurer to compensate for business interruption losses.
If you’re a business owner who’s having trouble securing a fair payout after filing a business interruption claim, an experienced lawyer can investigate and help dispute your claim to ensure you receive the insurance settlement you’re owed.
Causes Of Business Interruptions
Many different types of accidents, natural disasters, and other sources of economic hardship can wreak enormous havoc on a business’s income. This can threaten the livelihood and sustainment of a business, potentially putting establishments at risk for job loss, wage cuts, and closure.
Common incidents that lead business owners to file business interruption insurance claims include:
- wind and hurricane damage
- theft and vandalism
- falling objects
- loss of electricity
- supply chain disruptions
- cyber incidents
- machine breakdowns
- supplier failure
What Coverage Is Offered For Business Interruption?
Business owners who experience lost income as a result of a disaster and are covered under a business interruption insurance policy may be eligible to seek reimbursement by filing a business interruption claim with their insurer. This type of coverage is also sometimes referred to as business income coverage.
Business income coverage is meant to support the financial recovery of a business after a period of interrupted business, during which an establishment may be forced to close or reduce hours temporarily.
Business interruption coverage is intended to compensate for lost income, property damage, and other expenses resulting from theft, a natural catastrophe, or another type of incident that has negatively impacted business operations. These are known as covered perils.
The best way to learn what types of covered perils are eligible for cost coverage is to read carefully through your individual business income insurance policy. Policies can often differ between insurance carriers.
The amount and types of coverage you are entitled to may depend on your state of residence, the specific policy under which your business is covered, and other factors related to the incident.
Business interruption insurance coverage may reimburse businesses in the following ways:
- Lost income: Lost income as a result of tainted or destroyed merchandise (e.g. after a fire) based on estimated pre-loss earnings
- Extra expenses: Additional expenses such as relocation costs, rent costs, and other expenses related to total or partial interruption of business, including physical loss or damage of property, may be covered under your business interruption policy
Business interruption insurance typically outlines a coverage limit determined by your insurance carrier. This is the maximum amount that can be paid for a covered claim. While business owners cannot necessarily predict disasters, it’s important to choose coverage limits that are appropriate for your business operations.
When purchasing business interruption insurance, consider factors such as: an estimated timeline for how long it would take for your business to start back up after a loss and whether safety systems at your place of business, such as fire sprinklers and fire alarms, are up-to-date and functioning.
Civil Authority Coverage For Business Interruption
Civil authority coverage is a provision that is offered within many insurance policies in order to compensate for business interruptions that occur due to an issued order by a civil authority. This includes orders issued by local, state, and federal government authorities.
For instance, in the wake of the coronavirus (COVID-19) pandemic, most states nationwide have issued mandatory closures for businesses deemed non-essential in order to slow or prevent the spread of the highly-contagious disease.
Under this order, many businesses have been prohibited from continuing business operations on their usual premises. Unfortunately, the question of whether resulting income losses are eligible for coverage under this type of provision largely depends on the terms and conditions outlined within your specific policy.
In many cases, civil authority coverage is triggered only in cases where the lost income is linked to direct physical losses (e.g. damage to merchandise or property). This type of coverage may then be determined and paid out by the insurance company according to the actual loss of business income sustained and other extra expenses.
Business Interruption And Restoration Period
The restoration period detailed within a business interruption insurance policy is another factor to consider when deciding the type of policy you wish to purchase for your business.
The restoration period refers to the length of time your policy can compensate for covered losses after filing a claim for lost income. Many insurance policies have restoration periods of at least 12 months, providing business owners with up to a year to receive coverage benefits.
Regardless of the length of your policy’s restoration period, however, it’s important to document your losses and file a claim for coverage benefits as soon as possible. Any delays in filing a claim may result in a delay in receiving coverage.
Any repairs or replacements for property damage should also be made as soon as possible to ensure that reimbursement can be paid in a timely manner.
How Insurance Companies Can Mismanage Business Interruption Claims
For many businesses, having business interruption insurance can be critical in the aftermath or midst of a disaster. However, as many business owners are unfortunately aware, just having insurance does not always mean it’s going to be easy to receive reimbursement in times of peril.
Insurance companies are for-profit businesses that generally operate in their own best interest, which in some cases can lead to the use of manipulative or otherwise misleading tactics to reduce or deny insurance claims. This is known as acting in bad faith and can become the basis of a legal claim or lawsuit against the insurance company in question.
Common bad-faith tactics used by insurance companies to complicate the claims process for business owners include:
- unjustly denying a claim
- undervaluing a claim
- providing false or misleading information about your coverage
- refusing to investigate a claim
- failing to provide an explanation for a denied claim
- drawing out the process of fulfilling a claim unnecessarily
The last difficulty business owners want to face in the aftermath of a disaster is having trouble receiving reimbursement under their business interruption policy.
If you believe your insurance carrier is wrongfully denying or undervaluing your business interruption claim, you may be eligible to take legal action against the insurer and dispute the claim.
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Do You Need To Hire A Lawyer To Dispute A Business Interruption Insurance Claim?
Although it’s not necessary to hire a lawyer to dispute a business interruption insurance claim, consulting a lawyer is highly recommended. Most insurance policies contain complex legal language that can be difficult to decipher without a solid understanding of insurance law.
Business interruption claims lawyers can help you understand your legal rights as a policyholder and determine if your insurance carrier has wrongfully denied or reduced your claim to their own economic advantage.
At Florin|Roebig, our business interruption insurance claims lawyers can serve you in the following ways:
- breaking down your insurance policy to determine your eligible benefits and covered losses
- investigating your claim to determine whether your insurance carrier has acted in bad faith
- conducting a comprehensive damage assessment
- collaborating with a team of legal professionals, engineers, and business experts
- providing an estimated settlement value for your case
- handling communications with your insurance carrier on your behalf
- fighting for the reimbursement you are owed based on the extent of your losses
- going to trial if necessary to ensure you receive nothing less than a fair settlement
- communicating clearly and effectively with you every step of the way
Business Interruption Insurance Lawyers Serving The U.S.
Voted one of America’s top law firms, the lawyers of Florin|Roebig are dedicated to fighting on behalf of business owners who wish to dispute a denied or undervalued claim made by their insurance carrier.
Our law offices are capable of serving clients out of our office locations in Florida, Texas, Colorado, and Minnesota—using our collective knowledge, skills, and resources to secure the best possible payout based on the details of your case.
Our team of top-rated business interruption insurance lawyers includes:
- Wil H. Florin, B.C.S.
- Tommy D. Roebig, B.C.S.
- Chase P. Florin, B.C.S.
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Find A Business Interruption Insurance Claims Lawyer Near You
At Florin|Roebig, our lawyers are specialized in civil law and have the expertise and drive necessary to fight for a fair settlement on your behalf for lost income.
If you wish to dispute a claim offer from your insurance carrier, time is of the essence. Disputes must be made in a timely manner in order to meet deadline requirements for business interruption insurance claims and ensure you can receive your due reimbursement as soon as possible.
Don’t wait to learn how much your case may be worth. Call us today to schedule a free case evaluation with one of our top-rated lawyers to discuss the details of your case.