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Three things a business should do about business interruption insurance

In the midst of the ongoing COVID-19 crisis, nearly one-third of business owners’ report cash flow as their biggest challenge over the next few months, according to a survey of small and medium size business owners.

Just like many of us, these business owners are struggling to balance the needs of their business, caring for families and household responsibilities. Many business owners have been paying for business interruption coverage intended to protect companies from the loss of income resulting from unexpected risks and after being hit especially hard, small businesses are dependent on this coverage to stay afloat and provide jobs to employees.

While many business owners are overwhelmed managing the pandemic’s resulting disruption to business operations and daily life, it is important owners effectively deal with their insurer. These small business owners should take three actions.

  1. Locate your policy

    Specific language within individual policies will determine if coverage is triggered, so first and foremost owners need to locate complete copies of their policies.

    Business interruption insurance coverage is typically found in a property and casualty insurance policy or a business owners’ packet of insurance. If a company is unable to find their business owners policies, they should contact their brokers and request a copy.

  2. Have an attorney review it

    Policy language and terms will not only determine if coverage is prompted, but also the extent of coverage and what constitutes a financial loss. The insurance industry appears to have implemented a blanket denial approach for policy holders instead of addressing each individual claim on a case-by-case basis. Therefore, regardless of the advice given by carriers or brokers, it is in a business owner’s best interest to have policies examined by a lawyer to interpret crucial policy provisions.

    Interpreting complex, dense policy language and how various provisions interact with one another is challenging. It is critical to have your policy reviewed by an attorney with insurance coverage and litigation experience is critical to ensure the policy holders receive the coverage and protection that they have been paying for.

  3. File a claim

    If a claim is not submitted, business owners may not preserve their right to coverage under their policy. Because policies commonly stipulate a window of time during which a claim should be filed, it is vital business owners take timely action initiation the claims process.

    Business owners should also keep a record of all the various ways the company has experienced a loss. Beginning with the date of shutdown and going forward, track all losses and expenses incurred because of the pandemic and the necessary changes to business operations.

    Even if a claim for business interruption may likely be denied given the industry’s position, taking these steps will protect business owners and best position them to obtain a recovery under applicable policy coverage.

  1. File a claim

if a claim is not submitted, business owners may not preserve their right to coverage under their policy. Because policies commonly stipulate a window of time during which a claim should be filed, it is vital business owners take timely action initiation the claims process.

Business owners should also keep a record of all the various ways the company has experienced a loss. Beginning with the date of shutdown and going forward, track all losses and expenses incurred because of the pandemic and the necessary changes to business operations.

Even if a claim for business interruption may likely be denied given the industry’s position, taking these steps will protect business owners and best position them to obtain a recovery under applicable policy coverage.