Contingent Business Interruption Coverage
Business interruption insurance is specifically designed to cover any loss of income experienced by a policyholder because of the loss or damage of business property. In most cases, these policies come into play when a business owner’s actual premises are damaged. It is, however, possible in some situations to obtain contingent business interruption (CBI) coverage for any lost income resulting from damage suffered by someone else, including direct suppliers and receivers of goods and services provided by the insured. For help determining whether your own policy could kick in to cover losses sustained due to COVID-19-related business closures, please call a Fort Lauderdale business interruption lawyer in Fort Lauderdale who can advise you.
What is Contingent Business Interruption Coverage?
Unlike general business interruption insurance policies, contingent business interruption coverage is designed to cover income lost by businesses, not because of damage to their own property, but because of property damage experienced by the direct suppliers or recipients of the goods or services they manufacture or produce. However, a person will only be able to recover compensation under this type of claim if the property damage suffered by the suppliers or receivers of the product would have been covered if it had occurred on the policyholder’s property.
Many different types of businesses purchase CBI coverage, but it is most widely used in a few different situations, including:
- When the insured’s business depends on a single supplier for materials;
- When the policyholder depends on only a few manufacturers or suppliers to produce its merchandise;
- When the insured depends on only a few recipient businesses to buy the majority of its products; and
- When the policyholder relies on nearby businesses to attract customers.
The COVID-19 pandemic has had an enormous financial effect on businesses across the country, especially those that fall under these categories. Please call our office today to learn more about your own potential entitlement to compensation during this difficult time.
Coverage for Direct Supplier Relationships
CBI coverage only provides compensation to policyholders for losses sustained by the direct suppliers and receivers of the insured’s goods or services. Unfortunately, this can create a gap in coverage for policyholders who are engaged in multi-tiered supply chains. If, for instance, a customer of one of the policyholder’s suppliers experienced a loss resulting from an interruption in its operations, and that in turn caused a disruption in the relationship between the insured’s direct supplier and the policyholder, this loss would most likely be excluded from coverage even though it did result in a loss of business income. In most cases, it is only when the policyholder’s direct supplier experiences a physical loss that an insured can expect to recover some type of monetary compensation.
An Experienced Fort Lauderdale Business Interruption Legal Team
If your business has experienced a loss of income because of the COVID-19 pandemic and you have a business interruption insurance policy, please call one of the experienced business interruption lawyers at Boone & Davis today. You can reach us by calling our office at 954-566-9919 or by completing one of our brief online contact forms.