Best Practices
Survival Tip #5: Does Your Business Interruption Insurance Cover COVID-19?
The recent SBA disaster loans are designed to keep people employed and to help small businesses stay afloat. However, they do not cover COVID-19 business losses. That's why many high-profile chefs, restaurateurs, and even legislators are pushing for business interruption insurers to cover losses due to COVID-19.
The question many independent restaurant operators are asking is, are my losses due to the COVID-19 pandemic covered by my business interruption policy? The answer is "it depends", according to Jeff Raizner, managing partner of Houston Law firm Raizner Slania, who categorizes business interruption policies three ways:
- Red Light -- Policies in this category contain a specific virus exclusion, it will be very difficult to argue for the insurer to cover the claim. Exclusion is just as it sounds, any loss or damage that isn't covered by your policy.
- Green Light -- Policies that include endorsements, language that specifically covers pandemic events or losses are at the other end of the spectrum. Like exclusions, endorsements require interpretation based on the facts of the particular case.
- Yellow Light -- These policies are most likely to be the source of disputes. They are silent on having neither exclusions nor endorsements regarding coverage of losses related to viruses or pandemics. These cases will often turn on the laws of the particular state.
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Business Interruption Insurance: Are You COVID-19 Covered?
You might have read the news high-profile chefs, restaurateurs, and legislators are pushing business interruption insurers to cover losses due to COVID-19. What are your chances of your claim being approved? An experienced insurance litigation attorney breaks down business interruption insurance as ...
Efficiency is doing things right; effectiveness is doing the right things.
- Peter Drucker
Whether or not your insurer will approve a business interruption policy claim can hinge on several factors, as Raizner notes, There are no one-size-fits-all answers.-
For the independent operator with a business interruption policy, the best place to start is by filing a claim. Under these conditions, any stream of cash flow to help you get through this crisis is worth pursuing.
Please read the following article for a more in-depth discussion of this topic.
