Many Miami and Broward businesses are feeling the financial impact of COVID-19. Due to closing disruptions, businesses are experiencing a dramatic loss of income. To lessen the impact of COVID-19, we recommend that businesses review their insurance policies immediately to determine if they have either business interruption coverage or civil authority coverage. If covered, a business may be able to file a claim to recover losses.
What is Business Interruption Insurance Coverage?
Business Interruption Coverage allows a business to recover certain losses in the event that the business suffers physical damage or loss that prevents it from operating its business. The general purpose of business interruption insurance is to make the insured party “whole” after a damaging event such as COVID-19.
Another way to recover is through Civil Authority Coverage. This type of insurance allows a business to recover losses when a civil authority issues an order that closes the business or prevents it from normal operations. In the COVID-19 context, since Governor Ron DeSantis ordered businesses to cease normal operations to contain the spread of COVID-19, your business may be able to recover losses.
Also, be sure to review the policy for Contingent Business Interruption coverage. Under this type of insurance, you are covered from losses due to damages to property owned by others. In the case of the COVID-19, if the virus causes damage to a major supplier, you might be covered for business losses stemming from that supply chain disruption.
How Do I Navigate Business Interruption Insurance?
Get started now. You may have a deadline to report your claim within a certain window such as 60, 90 or 180 days. Do not waste time – the clock starts running as of the date of damage.
Review your policy. Business interruption insurance is typically included as part of a commercial property insurance policy. Pay attention to covered causes of loss, exclusions, and limitations.
Document your loss and saved expenses. What expenses were not incurred as a result of the loss? Saved expenses include, but are not limited to, payroll, inventory, and utilities. Documentation is needed to substantiate loss of sales, customers, extra expenses (e.g., payroll, material, rent, and replacement inventory to shorten the period of restoration) and hard costs (e.g., legal and accounting).
Mitigate! The business should attempt to mitigate losses to the extent it can. Mitigation examples include continuing to operate if possible, limit the period of restoration, or mitigate certain costs.
Prepare your documentation. Gather tax returns, financial statements, sales forecasts, invoices, receipts, contracts, and exports/reports from accounting systems are a good start for independent third parties to document and/or verify the loss of business income.
Need More Information?
Business interruption insurance claims can be confusing, let us help you recover. Our attorneys take care of every part of your claim so you can put your focus on maintaining and building your business. Call our offices today!