In addition to a rising death toll, the financial losses associated with the coronavirus (COVID-19) pandemic across the U.S. and around the world continue to climb.
As an epicenter for the coronavirus, the South Florida community has been hit hard by the outbreak. As retailers, restaurants, and businesses close their doors for the foreseeable future, there has been a lot of discussion about the availability of insurance for business interruption arising from coronavirus-related shutdowns.
As a business owner, you are likely to be eager to learn if business interruption claims can be filed to recover losses that arise from coronavirus-caused shutdowns. Unfortunately, the answer is not so straightforward.
If you are a business owner in Florida, you may have already discovered that the process for filing a business interruption claim caused by coronavirus-related closures is frustrating and complex. Many insurance companies are denying business interruption claims associated with the coronavirus — and sometimes they are doing so in bad faith.
If you believe your coronavirus business interruption claim has been rejected in bad faith, or you want to learn more about what is covered under business interruption insurance, we invite you to get in touch with the Law Office of Andrew Winston. 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 in the event you and/or your suppliers are forced to shut down due to disasters and other emergencies.
So, why might your insurance company deny your corona-virus related business interruption claim? A lot of this has to do with the specific language of your policy. Many insurers are contending that the coronavirus does not satisfy the “direct physical loss or damage to” requirement stipulated by typical business interruption policies.
When might your business be covered by a corona virus-related business claim? Some specialized policies for certain types of industries — like hotels, restaurants, and healthcare — may offer coverage for communicable diseases. To determine whether your specific policy will cover a coronavirus shutdown, it is important to review your policy closely and seek legal guidance.
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 were 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 would have 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 calculations. 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.
Particularly when it comes to coronavirus-related claims, 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 are seeking reimbursement from coronavirus business disruption.
As a business owner in Florida, you know that every dollar matters. However, just because your business has been harmed by coronavirus does not mean you are 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 effective business interruption claim possible.
The Law Office of Andrew Winston is proud to have years of expertise in defending businesses in South Florida. We support local businesses in their efforts to file business interruption claims during this devastating outbreak. 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 due to the coronavirus in South Florida, we encourage you to get in touch with the legal team at the Law Office of Andrew Winston. We have the resources, experience, and tenacity to serve businesses affected by the coronavirus in South Florida and beyond.