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Does Your Business Interruption Insurance Apply to COVID-19?

The effects of COVID-19 have hit small businesses especially hard. If you own a business, now is the time to double-check your insurance policy. When you do so, you’ll be looking for a clause like this:

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.”

If you see this clause, or if you have a business interruption insurance policy (usually you pay extra for this), you may be entitled to insurance benefits. Nevertheless, other sections of your policy may preclude you from benefits. When it comes to insurance, the devil really is in the details.

Inclusions and Exclusions

Insurance policies typically pay out benefits for “covered perils” or “covered losses.” These include natural disasters, like fires, floods, theft, and even hurricanes. Sometimes, however, a national state of emergency (like the one we are experiencing now) can trigger coverage that would have otherwise been excluded. If you cannot access your business due to forced closures in the city, county, and state, shouldn’t you be able to use your insurance?

This argument may be effective unless your policy has a virus exclusion. Many insurance companies wrote out coverage for losses “due to a virus or bacteria” after the SARS, swine flu, and bird flu crises of years past. Still, some states, like New Jersey, argue that this worldwide emergency should necessitate coverage and have passed legislation to help ensure business owners get the insurance benefits they paid for.

Steps You Can Take Now

With all the unknowns surrounding the COVID-19 pandemic, we wanted to give you some concrete steps you can take to protect your business:

  1. Find a copy of your full business insurance policy or ask your agent for a copy. Make sure your copy includes all endorsements, riders, and exclusions.
  2. Keep track of how much money you are losing and your efforts to mitigate your losses.
  3. Call Dean Law Firm at (281) 280-8900 or contact us online for a FREE policy review and case evaluation.
  4. Stay compliant with local, statewide, and nationwide regulations and restrictions.
  5. Bring your business online as much as possible and keep hustling. Sell gift cards, create online promotions and discounts, and offer curbside pick-up if you can.

Keep in mind that we will get through this, especially if we band together and find opportunities for hope and kindness.

Our team at Dean Law Firm is pleased to offer free consultations, and we are here to help in any way we can