Since March 2020, when the first orders to shut non-essential businesses came in, business operations have and continue to fray from the present difficulties involved in steering through this crisis and prospects of an uncertain and anxiety-ridden aftermath. The negative effects of the coronavirus on global supply chains and sales are sending businesses scurrying for gauze to stop the bleeding; ensuring that insurance claims against business interruption policies are on the rise.
Business interruption (BI) insurance is a way for businesses that have suffered loss from the disruption occasioned by the coronavirus known as COVID-19 to recover their losses. This type of policy typically grants coverage to businesses towards recovering certain losses accrued, during a period, due to a covered disruptive event affecting operations. The aim is to keep the business in the position that it would have maintained had there not been an interruption in business operations.
If you own a company with business interruption insurance, then you know that payout can be the difference between survival and cessation. The only problem is that insurers run a business too, and your claim will be taken as a challenge to their own survival. As a result, you will need to maximize your business interruption coverage and avoid mistakes or omissions that may prove harmful to your claim.
The following is a checklist, for policyholders, of steps before, during and upon unsuccessfully making a claim.
A business that suffers a loss as a result of disruption arising from Covid-19 should first review its insurance to determine if it has cover. According to the United States Small Business Association, over 90% of businesses fail within two years of being struck by a disaster. Yet, even more alarming is the fact that about 40% fail to re-open following disaster due to lack of or miscalculated business insurance.
The standard is that the loss of income suffered by a business is a direct result of physical damage to insured property. Thus, the insured is, in the circumstances, unable to claim under its business interruption insurance as Covid-19 has not caused any physical loss. However, business interruption insurance is not a standalone policy and is typically melded with, or included as part of another existing insurance package. Which is why policyholders may still be able to obtain relief from business interruption via a package incorporating “time-element” cover, supply chain insurance, or prevention-of-access extensions, or civil-authority mandated closures.
So, whether your claim is covered will depend on the terms and conditions of the policy and the circumstances surrounding the loss. Relief is possible, assuredly through additional coverage options which are tailored to your business-specific needs. But there is also the chance that even these are subject to limitations and exceptions.
As a policyholder seeking to make a claim, you should;
You should do the following with aid from, and reasonably after consulting with a qualified lawyer. You can contact our experienced insurance attorneys at Oshan & Associates through our page, and we will help you understand your rights and options in a free, no-risk consultation.
The standard is that the claim must arise out of a cause covered or included under the policy. To make your claim, you should;
Your insurer’s relationship with you should, by law, be one of good faith. It is bad faith where your insurer intentionally and wrongfully denies a claim they are obligated to pay. A common scenario is that you are shortchanged and denied the full value.
Your insurer may also either handle your case improperly or be unwilling to help you claim against your business interruption policy. It is also possible that your insurer is rewriting policies to exclude losses from certain events.; or failing to properly investigate business insurance claims.
In such situations, you should;
Your lawyer can help you:
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