How Do I Prove a Business Interruption Claim?

The coronavirus has turned the world upside down. You always had business interruption insurance but thought that if you ever needed it, fire or natural disaster would prove the culprit. Instead, your business, like millions all over the country, was interrupted due to a pandemic. Now, in these unprecedented times, you must prove your business interruption claim to your insurer.

While some insurance carriers are denying business interruption claims based on coronavirus, do not assume you are not covered for pandemic losses. Insurance company denials over pandemic business interruption insurance are going through litigation, and the situation is still evolving. The primary issue involves the nature of property damage as related to coronavirus.

Read your commercial insurance policy carefully– including the fine print. What your policy does or does not explicitly cover is often in the details.

A New York City business interruption insurance attorney at Douglas & London will protect your rights and fight aggressively with insurance carriers so you might receive the compensation you deserve for your losses. We can also review your policy if it is unclear whether contagious diseases or mitigation by disinfection are covered.

Proving a Business Interruption Claim

Proving a business interruption claim involves documenting that the property covered by the policy suffered damage. Further, that damage has to result from a covered event. In turn, the damage to the property caused business interruption and loss of income. Finally, the business loss was directly attributable to the covered event. You must provide objective evidence of the losses via your financial statements, general ledger, tax returns, customer orders, vendor correspondence, and information regarding the physical restoration of the property.

That is a straightforward way to prove a business interruption claim. In the Age of Covid-19, property damage goes beyond the physical condition of the premises.

What to Do Now

First, file a claim. Your insurance agent may have told you not to bother filing because of the certainty of denial. You may also have heard that filing such a claim will raise your insurance rates.

Your business interruption insurance policy likely requires a “prompt” notification when a loss occurs. By not filing a claim in a timely fashion, usually in 90 days, you could jeopardize the ability to receive damages. File the claim with a sworn proof of loss, documenting the amount of your losses.

Coronavirus and Property Damage

Property damage, in conjunction with the coronavirus, does not necessarily refer to physical damage. Because of the pandemic, you could not safely use this property. Various state courts are exploring this issue right now. There is little question that no matter the conclusions, higher courts will hear the appeals.

Contingent Business Interruption Coverage

Your policy may include contingent business interruption coverage. It is supposed to protect you if suppliers upon which you rely cannot provide you with inventory. If your business is dependent upon particular attractions, as is the case with many companies catering to tourists, you may also prove eligible for contingent business interruption coverage when those attractions are closed.

Civil Authority Closures

While business interruption insurance focuses on property damage, there is another aspect to this coverage that may preclude the need to prove damage to your property from coronavirus. The civil authority closures, such as mandatory stay-at-home orders and closing of non-essential businesses, are not covered under business interruption insurance– but are often included in commercial liability policies.

With insurance policies, language is everything. The wording about a civil authority closure provision in your policy could potentially override the physical damage requirement. In addition, there is no need to prove that coronavirus existed on your premises.

Contact a New York Business Interruption Insurance Lawyer

If the pandemic severely impacted your business and your insurance company is denying your business interruption losses, contact us at Douglas & London. Arrange a free consultation today by calling or texting or completing our online form.

Because so many small businesses had to shut down because insurance companies did not honor their business interruption policies, the sole option for many is taking legal action against their insurance carriers. Join the thousands of other business owners we are fighting for. Since we work on a contingency basis, there is no fee unless you receive compensation.