COVID Business Interruption Claim: Recoup Loss Revenue

QUESTION: Like many practices, COVID-19 sadly has resulted in our office losing significant revenue. We have heard that our business interruption insurance could cover some of our losses which could make a big difference in our practice surviving through the year. Our carrier has supplied little guidance and not responded to our queries. Where do I find business interruption coverage in my policy, and more information on how to file a claim?

Question from Lansing, MI subscriber

ANSWER: Many insurance companies are claiming that business interruption policy provisions don’t apply to coronavirus losses. If yours is one of them, you’ll need to work extra diligently to pursue your claim — on top of everything else you’re doing to help your practice recover.

Keep reading for answers to your burning questions about your COVID business interruption claim and revenue loss.

Coverage for business interruption losses depends on your policy language. If the policy is not clear, it is typically interpreted in favor of the business owner, and against the insurance company. You could find business interruption coverage in several areas of your policy:

Lost revenue could be recoverable under your property damage provision
Losses could also be recoverable under your civil authority coverage.
Or, you could recover lost income under crisis event, site pollution, or infectious disease provisions of your policy.

But while your policy is a deciding factor, it’s not the only one. If your coverage, like many, is ambiguous, the courts — not your carrier — could be the deciding factor. In fact, lawsuits have been filed in many states to challenge coverage denials due to the COVID-19 pandemic.

There are some initial steps you should take in the event that you decide to file a claim.

First, gather all of your insurance policies, and examine them for areas where business interruption coverage could exist.
If you haven’t yet, begin tracking all COVID-related losses, damages, and expenses.
Be sure that you have financial documentation that supports your losses. This documentation may include the applicable lockdown order from your state or county, if applicable.
Consult with an insurance broker or legal counsel to determine what rights you have under your policy.

Be resilient in filing your clam. Insurance companies are pressuring practices to avoid filing claims for business interruption reimbursement. Remember: insurance companies aren’t really “on your side.” They want to collect as many premiums as possible, and pay out as few claims as possible—including yours.

So it’s not surprising that insurance companies want to dissuade you from pursuing a claim. They’re making onerous documentation requirements. For example, your carrier may require you to submit proof that the coronavirus was actually present in your practice. If your practice closed down right away, you wouldn’t have that proof. And even if your practice stayed open during the pandemic, you wouldn’t necessarily know if a patient was infected, unless they reported it.

If your carrier denies your claim, a successful lawsuit depends on the losses your practice has suffered, as well as what it would take to win. Before making any legal moves, you must conduct a thorough cost-benefit analysis of litigating your coronavirus business interruption coverage issue.

For more ways to identify key policy language and exclusions that will impact your ability to recoup pandemic related-losses from your insurance policies, and how to ensure you are protected in the future, sign up for the online training “Recoup COVID-19 Losses: Get Your Insurance Policy to Pay Up,” by legal expert, Kyle Johnson, Esq.