It is estimated that some 7.5 million small businesses may have to permanently close their doors because of the economic impacts of COVID-19. But, these owners are looking towards their business interruption insurance coverage to keep their businesses afloat during this uneasy time. But what happens when that insurance is not available to them?
What Is Business Interruption Insurance?
Business interruption insurance is used to help a business replace lost income and cover extra and unexpected expenses as a result of an unprecedented event. Sometimes referred to as business income insurance, these policies are often part of a business owner’s insurance policy.
In general, business interruption coverage allows a business to cover damages from a physical loss that prevents it from operating. However, there are also civil authority coverage policies that typically allows a business to “recover losses when a civil authority issues an order that closes a business or prevents it from normal operations.”
How Covid-19 Impacts Policy
Many insurance companies are saying COVID-19 is not covered under interruption policies as no physical damage has occurred. However, lawmakers in Pennsylvania are prompting insurers to take another look at policies and cover some COVID-19 related losses.
This has been met with resistance however, as the insurance companies are claiming this can lead to insolvency. The National Association of Insurance Commissioners has explained that any action set forth by Congress would be challenged as unconstitutional as the Contracts Clause of the U.S. Constitution typically prohibits states from enacting legislation that impairs contractual obligations.
What Are Small Business Owners to Do?
Because of the time sensitivities of filing a claim with insurance companies, it is imperative that small business owners act now to file their COVID-19 related claims. Each industry typically has its own insurance standards. For example, some businesses in the restaurant and hospitality industry may have clauses that address losses by viruses and mass illness. In addition, some policyholders may have protections against canceled events.
This is why it’s important for small businesses in NEPA to review their policies. Your insurance company must follow through with your claim for review. If they do not, there may be repercussions for them down the line.
Because insurance policies are contracts, they must be followed as such. If your insurance holder does not follow through with the terms of your policy, specifically if you are owed coverage as a result of COVID-19, you may have a breach of contract case.
Right now, there are many unknowns. If you are a small business in NEPA and have questions regarding your business interruption policy coverage, you need Fellerman & Ciarimboli.
During This Uneasy Time, Fellerman & Ciarimboli is Here for You.
If your insurance company will not review your business interruption claim, or you have questions on the language used in your policy, do not delay. As more time passes, the less likely you are to be able to file a claim with your insurance provider. Contact the Fellerman & Ciarimboli law firm and let us help you. Your consultation is free and without obligation.