Is my business eligible for interruption insurance coverage?

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For many people, finding success through entrepreneurship and becoming their own boss is the American dream. Fusing passion and ambition together to establish and nurture a business is no small feat — the level of tenacity involved in starting something from scratch is unparalleled. 

Nationwide, businesses are under government-mandated shutdown orders that were put in place to protect the health and safety of the country and control the outbreak of COVID-19, a disease caused by the coronavirus. Unfortunately, the economy has faltered during the pandemic response, testing the resilience of entrepreneurs and business owners alike.

Business interruption coverage is a form of insurance that provides some financial safeguard to business owners whose establishments must close or relocate for a period of time due to means beyond their control. This may entail any disaster-related incidents, including, but not limited to, severe weather or a global pandemic. Coverage may include reimbursement for lost profit or added business expenses.

Businesses that have interruption coverage as a part of their insurance policies have started filing claims related to mandatory closure orders, but many insurers are denying such claims. Several insurers assert that after previous virus outbreaks, such as the severe acute respiratory syndrome (SARS-I) outbreak in 2002, policies do not include coverage for pandemics. This stance has led to widespread outcry disputing the fairness and legality of denials.

If you filed a claim to receive financial support from your business interruption insurance and it was denied, you may have several legal options available to you. Reviewing your policy and insurer’s denial with a lawyer as soon as possible after receiving a denial is in your best interest.

Wrongful denials can be remedied through breach of contract lawsuits and, in some cases, bad faith claims against insurers, where their conduct in issuing a denial has been without any merit. But you won’t know if the denial you received was wrongful unless you review it with an attorney.

Despite social distancing requirements that have forced temporary office closures, most attorneys remain available for consultation and are able to take legal action while working remotely. Courts remain operational but under limited public access. With the right assistance, you can get the coverage you purchased so that you can continue your business pursuits.

Timothy L. Salvatore is an insurance bad faith and trial attorney at Katherman, Briggs & Greenberg, LLP (KBG Injury Law), which has offices throughout South Central Pennsylvania — in York, Lancaster, Hanover, Gettysburg and West Shore.