Source: @maximeutopix
With the recent resurgence of COVID cases in San Diego, many businesses are being forced to close their doors, either temporarily or permanently. Despite the lack of resources and assistance that many business owners are facing, there is one thing that may be able to help: business interruption insurance.
What is Business Interruption Insurance?
Business interruption insurance is a type of insurance policy that covers lost income after a business experiences disaster. These policies are not stand-alone but are usually an optional add-on to commercial property insurance. Business interruption premium payments are considered business expenses and are tax-deductible.
What Does it Cover?
This type of insurance covers businesses if they experience some sort of physical damage, such as a fire, flood, or theft. Specifically, business interruption insurance covers the recurring expenses that may be unpayable during a disaster, such as employee wages, taxes, and loan payments. Unfortunately, many policies have specific exclusion clauses for viruses. Now, the issue of whether these policies cover a pandemic is being asked by many business owners and legal professionals.
Despite the murkiness of this unprecedented issue, hope is not lost. An argument can be made that a COVID-19 infection within a building could qualify as physical damage since the virus is physically affecting the space by lingering on surfaces. Hundreds of lawsuits related to COVID have begun to challenge the definition of “physical damage”. In the first case of its kind, back in March 2020, the insurance company unfortunately won after the exact language of the insurance policy was examined; but the fight for businesses continues.
Depending on the exact policy, location, and judge, winning a lawsuit may be possible. One federal judge is encouraging businesses to keep trying and recently sent a case through to trial. He denied the insurance company’s request for dismissal and argued that jurors may find that a COVID-19 infection can be defined as physical damage.
My Claim Was Denied. Is There Anything I Can Do?
If you have business interruption insurance and had to close your business doors due to the pandemic, your first step is to file an insurance claim. If your claim is denied, as many are, local San Diego business interruption lawyers can take an in-depth look at your policy. Attorneys who specialize in insurance law know all the complex ins and outs of insurance policies, and will be able to determine if your claim has validity. If a law firm believes your situation qualifies, they will take your case to court and fight on your behalf. Most attorneys work on a contingency fee basis, meaning you only pay them if they win.
If the pandemic has forced your business to close its doors, and you have business interruption insurance, filing a claim is worth a shot. Everyone except the insurance companies is rooting for businesses to survive COVID-19. When the pandemic first hit in Spring 2020, the California Department of Insurance put out a press release calling for business interruption claims to be investigated fairly. If California commissioners and legal professionals continue to do their part to help, there may be a chance to save as many San Diego businesses as possible.