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If you are a business owner in Florida, you know that many reasons beyond your control can lead to your business having to temporarily close its doors. Unfortunately, you may have also discovered that the process for filing a business interruption claim can be frustrating and complex. Many insurance companies attempt to deny business interruption claims, and sometimes they do so in bad faith.
Suppose you believe your business interruption claim has been rejected in bad faith or want to learn more about what is covered under business interruption insurance. In that case, we invite you to get in touch with Winston Law. We have a long history of representing commercial cases and can help you navigate the murky waters of business interruption insurance law.
Often included as part of commercial property insurance, business interruption coverage is designed to protect your business against lost income that arises from shutdowns caused by disasters and other emergencies. Generally, business income or interruption insurance goes into effect in one of three scenarios:
As a general rule of thumb, business interruption insurance kicks in when “direct physical loss or damage to” your insured property occurs after disasters like hurricanes, floods, earthquakes, and fires.
Likewise, contingent business interruption insurance and contingent extra expense coverage cover lost income and expenses that arise when your company’s supplier is suddenly shut down.
As a savvy business owner, you may have purchased business interruption and contingent business interruption insurance as part of your commercial property insurance policy. In theory, this type of insurance should protect you if you and your suppliers are forced to shut down due to disasters and other emergencies.
So, why might your insurance company deny your business interruption claim? Generally speaking, denials occur when the insurance company argues that the specific language of your policy does not cover the loss in the claim you are filing. One common reason is that the source of your business interruption did not satisfy the “direct physical loss or damage to” requirement stipulated by typical business interruption policies.
If you receive a denial, it does not mean that you have to give up. Insurance companies will do everything in their power to avoid paying out, but an experienced business interruption attorney can help you fight back. Just as importantly, they can make sure that you calculate your losses correctly to maximize your compensation.
Another confusing aspect of business interruption coverage is understanding how recoverable financial loss is calculated. Essentially, most policies include language designed to return your business to the same financial position you would have been in were it not for the event that caused the interruption.
When reviewing your policy, you will probably see the term “net-plus,” which refers to the total profit your business would have earned before income taxes. Was it not for the disruptive event, plus the ongoing costs of your business that could not be avoided over the loss period?
For example, let’s say your company was forced to halt all operations for five months but still had to pay $50,000 in unavoidable operating expenses like rent and utilities. If your business had typically earned $200,000 during those five months, the net-plus business interruption loss would be $250,000.
Note that these calculations rely heavily on your ability to demonstrate your estimated profits based on previous earnings, pre-disaster forecasts, and other complicated economic analyses. In addition, your specific situation could also impact your net-plus calculations since you might experience only a reduction in business rather than a total halt.
Business interruption coverage can be one of the most complicated kinds of insurance around. That is why it is advisable to obtain legal counsel from a South Florida lawyer experienced in commercial cases and business interruption claims if you seek reimbursement for some business disruption.
As a business owner in Florida, you know that every dollar matters. However, just because your business has been harmed by an external event does not mean you are automatically done for. With the help of a seasoned South Florida property insurance attorney, you can review your policy and devise a strategy to submit the most influential business interruption claim possible.
Winston Law is proud to have years of expertise defending businesses in South Florida. We support local businesses in their efforts to file business interruption claims during any covered events. We work on a contingency basis, which means we don’t charge legal fees unless your case is successful — in other words, we do not get paid until you do. Our contingency fee structure ensures your Florida business is protected in these financially turbulent times.
If you are considering filing a business interruption claim in South Florida, we encourage you to contact the legal team at Winston Law. We have the resources, experience, and tenacity to serve businesses affected by harmful events of all kinds in South Florida and beyond.