When business operations are interrupted for any reason, it means automatic loss of revenue. Many business insurance packages include business interruption insurance. This form of coverage is designed to protect your business by restoring it to the same economic position it would have been in had the interruption not occurred. In some cases, however, insurers will deny or substantially undervalue business interruption claims.
At The Lenahan Law Firm, we understand how a loss of revenue can be devastating to a business owner. America was built by small businesses, which is why protecting them with proper insurance policies is so important. Sadly, insurance companies care more about their profits than they do their clients, and so are happy to deny, prolong, or drop a claim if it means they can pay as little as possible. That means one disaster and one denial can shutter a business’s doors forever. That is why we are so dedicated to helping the small businesses of America. If your Dallas business interruption claim has been denied, call our firm at (214) 295-1008. We want to help you.
For insurance purposes, business interruption means loss of business income sustained as a direct result of damage, destruction, or direct loss to the property of the insured caused by a covered peril. Business interruption insurance typically pays for actual loss of business income resulting from the necessary suspension of operations during a period of restoration. Important factors that come into play with business interruption claims are:
- Insurance companies are only obligated to pay out if an actual interruption of business occurred, leading to loss of business income.
- Business income is calculated as the net profit or loss before taxes that the business would have earned or incurred, plus reasonable operating expenses, including payroll.
- The period of restoration is generally defined as the time required to repair, replace, or rebuild destroyed or damaged property. This time period begins when the physical loss occurs and ends when the property should reasonably be expected to be repaired, replaced, or rebuilt. This means that you can recover damages that you may have suffered a direct result of natural disasters, fires, and other such unforeseeable issues. This kind of insurance is key for small and large businesses alike and can help keep you afloat even during the worst of times.
If you are forced to shut down operations because of a fire, natural disaster, or a pandemic, it can have a significant financial impact on your business. During the business interruption period, no goods or services can be delivered to generate revenue, yet regular operating expenses continue. These expenses may include mortgage or lease payments, utilities, insurance premiums, security services, employee benefits, payroll, and other operating costs. These costs are in addition to any losses from damage to property or equipment.
That means that you must continue to bleed costs in order to keep your business alive but are unable to turn a profit. How can you possibly make money when you can’t even open your doors? Under such circumstances, it is incredibly easy for business owners, as well as their employees, to completely lose their only source of income, and could even leave the owner in immense debt. Filing a claim with your business interruption policy may be key in making sure that both you and those who work for you are able to survive whatever disaster shuts your doors.
The COVID-19 pandemic has resulted in many non-essential businesses, such as theaters, salons, and gyms, being forced to close. Although these measures may have been necessary to slow the spread of the virus, they have also placed a heavy burden on business owners who must continue to pay salaries and ongoing expenses with no income coming in. Many businesses and people impacted by the coronavirus are filing claims under their business interruption insurance policies, as they have no other possible source of income. This sudden influx in claims, however, has pushed some insurance providers to begin issuing denials, despite the proper policies being in place.
Typically, business interruption insurance covers loss of business income resulting from an interruption in business operations caused by actual physical damage from a covered peril. For example, if the building is destroyed by fire, the business may need to rebuild or relocate and replace lost equipment and inventory before operations can resume. However, some business interruption policies cover losses caused by a disruption in a supply chain, in which case actual physical damage may not be a requirement. On top of that, some policies cover business interruptions caused by actions of civil authority. In the case of the COVID-19 pandemic, many businesses were forced to close by orders issued by state and local governments.
That means many businesses are now filing business interruption claims with their insurance policy provider, hoping to make back some of the money they have lost simply trying to pay their rent and employees. However, insurance companies have long been more interested in their own profits than the well-being of their clients. This means your claim, no matter how valid, could be denied, prolonged, or lowballed, leaving you without the compensation you need to stay afloat during the pandemic.
Such cases of denial are considered “bad faith” and are not uncommon when it comes to filing a claim with an insurance provider. While such actions are illegal in Texas, many insurance companies still try to get away with them, hoping the people they deny will simply accept defeat. Thankfully, a skilled Dallas business interruption attorney by your side, you may still be able to get the compensation you need following a disaster hitting your business.
Insurance companies are reluctant to pay out for COVID-19 business interruption. Whether you have a valid claim under your business interruption coverage will depend on the exact wording of your policy. If your Dallas business has suffered the loss of income through shutdown because of the coronavirus pandemic, contact The Lenahan Law Firm either online, or by calling (214) 295-1008 for a free consultation. We can review your policy to determine what types of business interruption losses are covered and advise you whether your policy allows you to file a business interruption claim.