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Interpreting Your Business Interruption Insurance Policy

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The specific coverage provided under business interruption insurance is determined by the language of the policy itself. For this reason, business owners who have experienced financial losses during the COVID-19 pandemic and also have business interruption insurance policies are often encouraged to carefully review their policies, being careful to note details about the definition of covered losses. These documents do, however, tend to be complicated, so if you have questions about the extent of your own coverage, you should consider speaking with an experienced Fort Lauderdale business interruption lawyer who can help you assess your policy.

Covered Losses

Language related to business interruption insurance coverage will usually be found in a property or casualty contract or in a comprehensive package policy. In either case, the policy should include a list of covered perils, such as theft, fire, and wind for which the insurer will provide compensation if those events result in the loss of business income. Other policies, on the other hand, state that they will cover all risks, except for those that are specifically excluded. Whether a business owner’s policy is of the first or second type will largely dictate whether they can expect to recover compensation under their policy. Generally, those whose policies contain broad language are more likely to recover for COVID-19-related losses.

Triggering Coverage

At this point, a policyholder will want to determine whether coverage can be triggered by the losses in question. For instance, physical damage is often a prerequisite in business interruption insurance policies, in which case, the policyholder will need to be able to demonstrate that the exposure or event can be tied to actual physical damage. Unfortunately, whether the presence of the virus at a workplace (necessitating a shutdown) satisfies the physical damage requirement still remains to be seen. There is, however, case law that supports these types of claims. In one case, for example, a court held that odor caused by defective carpeting in a company’s building constituted a physical injury. In another case, contamination by asbestos constituted a direct physical loss to property under an insurance policy.

The Timing of the Company Closure

Even if the actual presence of COVID-19 is found to satisfy the physical damage requirement, a policyholder will still need to demonstrate that the suspension of the company’s operations (if done as a precautionary measure) is still covered. For this reason, the timing of a company’s closure will play a key role in determining whether a business’s losses are covered. Fortunately, even if the timing of the closure doesn’t weigh in a company’s favor, an insured could still be entitled to compensation if the shutdown was the result of a mandate by a civil authority or a direct order from a landlord.

Call Today with Your Business Interruption Insurance-Related Questions and Concerns

If your business has sustained financial losses during the COVID-19 pandemic and you are trying to determine whether your lost income is covered by a business interruption insurance policy, please call 954-566-9919 to speak with one of the experienced business interruption lawyers at Boone & Davis today.




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