Insurance helps shield businesses from devastating financial loss during an outbreak of an infectious disease. Business interruption insurance is a standard component of a business property insurance policy designed to protect businesses against lost profits due to interruptions to their daily operations, including those caused by communicable or infectious disease. Business interruption coverage is triggered when there is physical damage to the property, in the case of a pandemic, contamination is considered damage.
Many commercial property owners have insurance policies that cover loss of business income with an endorsement on their property insurance policy. The endorsement protects from losses of business income and direct losses due to damage or destruction of covered property in the event of a serious threat to the functionality of a business. Review policy language with an attorney regarding payment claims for actual losses of business income if operations are suspended during a period of restoration due to physical loss, damage or destruction of property. When the damage is caused by the inability to inhabit the property, rents dry up, or revenues are lost because a business cannot operate due to factors outside of its control.
Business interruption insurance.
Business interruption insurance should cover: 1) actual business income losses due to the direct physical loss or damage caused by peril, in an amount not to exceed a policy limit; 2) the reduction in net income due to business operations being suspended; and 3) only the period of restoration, or the amount of time it takes from the suspension of business operations caused by the physical loss, damage, destruction or cessation caused by external factors, until the time business operations are back to normal. If a policy ends during the period of restoration, the coverage will remain in effect for the duration of that period. An experienced insurance attorney can assist with the process.
Contingent business interruption.
CBI coverage is designed to cover an insured’s business income loss resulting from loss, damage, or destruction of property owned by others, including direct “suppliers” of goods or services to the insured and/or direct “receivers” of goods or services manufactured or provided by the insured.
Interruption by civil or military authority coverage is provided for losses sustained by the insured, during the length of time when access to business premises is prohibited by order of civil authority. Renters and owners will claim COVID-19 impacts to businesses should be covered under business interruption protecting owners’ losses of rent and declining business profits.
Seek legal counsel.
The fallout from COVID-19 will involve a plethora of insurance claims and denials, including business interruption, worker’s compensation, directors and officers, and errors and omissions, for which you may need the professional services of Michael M. Raheb, an experienced attorney who can guide business owners to the best outcomes for their Florida businesses.