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What is business interruption insurance?

Business interruption insurance, also known as loss of business income insurance, is commercial property insurance designed to cover loss of income incurred by an organization due to a slowdown or suspension of operations at its premises due to a loss.  Business interruption insurance is often coupled with extra expense insurance, designed to provide coverage for additional costs in excess of normal operating expenses an organization incurs in order to continue operations following a disaster. 

​What is contingent business interruption coverage?

Contingent business interruption provides coverage for loss caused by supply chain interruptions.  For example, contingent business interruption may apply to a restaurant if an a food supplier is closed as a result of a loss.  To qualify as a “supplier” it is not necessary that the policyholder have a supply contract with the third party.

Is my business covered for business interruptions due to COVID-19?

All policies are different.  You should read your policy to determine whether there is a business interruption coverage exclusion for viruses such as COVID-19. Since 2002, the industry trend has been to exclude coverage for damage caused by viruses but this was not done universally.  Each claim for business interruption coverage is unique to the specific underlying facts and governing policy language.  As commercial insurance policies are exempt from having to be filed and reviewed by the Florida Office of Insurance Regulation, the number of policies affording or excluding business interruption coverage for viruses is unknown.

Does the local, state, of federal government's declaration of a State of Emergency affect my business interruption coverage?

Business interruption policies often extend coverage to business interruptions arising from orders of a “civil authority” that impair business functions. Recently, schools, cities and even countries have been locked down on government authority, resulting in severe business interruption in impacted areas. Many Cities and Counties in Florida have even based their emergency orders on COVID-19's propensity to attach to surfaces for prolonged periods of time causing property damage.  However, civil authority coverage extends no further than business interruption policy, and so the same exclusionary limits apply. Business owners are encouraged to read policy language in detail and consult a professional regarding any specific situation for a business.

My business has been ordered to close as a result of a City/County/Statewide Order - do I have coverage?

Closures of public gathering places and all nonessential business activity in major cities worldwide may trigger civil or military authority coverage — that is, for loss due to the prohibition of access to a business's premises caused by the proclamation of a civil or military authority due to property damage within a specified distance of the insured property.

If my policy provides coverage for business income losses as a result of COVID-19, what documents will I need to support my claim?

In order to present a business interruption claim, ​you need a calculation as to your economic damages.  You will likely need to provide general ledger detail data, sales registers, profit & loss statements, and tax returns.  We work with a team of experienced forensic accountants who will use your current and historical data as well as research your industry to forecast how your business would have performed but for the interruption.  

If you have any questions about the coverages afforded under your policy, please fill out the form below to contact us for a free consultation.

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