How Does Business Interruption Insurance Work?

Business interruption insurance policies are designed to protect businesses in the event of circumstances that disrupt normal functioning. Interruption insurance is generally part of a property insurance policy and is typically applied when a business property becomes unusable following a natural disaster or fire. A policy may also contain a civil authority clause that is triggered when the government prevents normal business operations. These policies are designed to ensure income, pay expenses, and cover payroll if a disaster occurs and businesses are affected.

Business interruption insurance policies are specifically written for each particular business. When filing a claim under business interruption insurance, the insurer’s specific policy and the circumstances governing the business’s losses determine payment of the policy. In many cases, businesses cannot resume operations or re-hire furloughed and laid-off employees if insurance claims are denied.

Can I Take Legal Action Against My Insurance Company for Denying my Claim?

Some insurance policies have specific exclusions for infectious viruses that close businesses, but others do not contain such carve-outs. Even when a particular policy does not have an exclusion, many businesses with COVID-19 related disruptions have encountered difficulty receiving payouts on their insurance claims. Insurance companies are invoking policy exclusions to deny coverage to policyholders. Some insurance companies have alleged that virus outbreaks, such as COVID-19, are simply not insurable.

Several businesses have filed lawsuits against their insurers for failure to pay claims alleging that the spread of COVID-19 has made business properties unsuitable for use and triggered losses under their policies.  These lawsuits also claim that a dangerous physical environment led to the implementation of stay-at-home orders and triggered the business shutdown. Even when a policy contains an exclusion, the exact language of the policy may not preclude payment for losses. Lawsuits against insurance companies have been filed by a variety of businesses, including restaurants, dental and medical offices, bars, theaters, and other hospitality businesses. More than a half dozen states have introduced legislation to require insurance companies to pay business interruption claims triggered by the COVID-19 outbreak.

Levy Konigsberg is prepared to pursue your claims associated with the global COVID-19 public health emergency.  We are currently accepting claims against insurance companies that have denied business interruption policies following disruptions caused by COVID-19.

If an insurance company has denied your business interruption insurance claim, it is important that you speak with a law firm immediately. We are committed to providing our clients with advice to help them obtain payment of their claims and resume their business activities. For a free consultation with the attorneys at Levy Konigsberg LLP, please call our toll-free hotline at (800) 315-3806 or submit an email inquiry.