I Didn't Know I Had Insurance For Business Interruption Losses!
Because you are a careful business owner, because your landlord required insurance coverage, or just because you wanted to insure your business against catastrophes like fires and floods, you may have secured an “all risk insurance policy.” Most of us think about fires, floods, hurricanes, tornadoes, explosions and similar natural catastrophes as “covered events” under our policies. But did you know LOSSES CAUSED BY THE PANDEMIC MAY BE COVERED!!
In Texas, insurers provide different types of policies and each policy has different endorsements, exclusions, and exceptions to the exclusions. When we buy insurance, we often pay attention to major clauses and forget about details that seem unlikely. If your business has temporarily closed, permanently closed, suffered a reduction in cash flow or lost profits, your losses may be covered. But how do you know?
Step one in analyzing your policy is getting a true copy of your insurance policy. That normally means you call your insurance agent and ask your agent to send you an electronic copy of your insurance policy with all endorsements and exclusions. You probably received a copy of your policy when it was purchased, but sometimes pages are missing and every word in the policy has a specific meaning. Missing a page or two could seriously affect your attorney’s ability to properly evaluate your policy. Once the full policy is received, the analysis can begin. But be sure you get a full policy. Insurance companies have procedures in place to prevent / slow an insured’s ability to file a claim. So insist on a complete copy of the policy and NOT just a copy of the declarations or “dec sheet.”
Once you have your policy, step two involves an attorney reviewing your policy to see what a “covered event” is. While there are form definitions in the industry, your policy will define a “covered event” as it applies to your business. What is a catastrophe? What is civil authority coverage? How do these definitions apply in your case? Was your business closed because your employees fell ill to the COVID-19 virus? That might be one reason to file a claim. Did your business close even though your employees were healthy, but the Governor, Mayor or County Judge ordered your business to close? That is a separate reason to file a claim under the policy. Did your business stay open, but sales fell because your business could only provide limited services? Again, your policy might provide coverage for this issue.
Once coverage is confirmed, your attorney can look at the endorsements to your policy that add or better define coverage. Even then, the insurance policies have “exclusions” to coverage that need to be considered. Often people look at the exclusions and think all is lost. However, an experienced attorney can look for exceptions to the exclusions that are also in the policy. This analysis is complicated and lawyers for the insurance company often disagree with lawyers representing business owners.
Regardless of the dispute between the carrier and the insured about coverage, step three in obtaining insurance benefits involve the correct filing of a claim asking to be compensated for damages. Again, definitions, terms and specific language affect what kind of benefits can be paid to an insured. If a house burns, it is simple to calculate the cost to replace the building. But business interruption coverage is more like health insurance benefits where each doctor’s visit, pharmacy bill and diagnostic test is covered over the span of time.
In other words, if your losses are insured, you might be entitled to a weekly or other periodic check to compensate you for your insured losses. If you are closed for four (4) weeks, you might be entitled to four (4) weeks of compensation. But some policies provide more coverage. If you reopen your business and it takes six (6) months to get your sales back to the pre-pandemic level, you might be entitled to six (6) months of benefits. Maybe there is a dollar limit on your coverage. What is that limit? How do you respond to the insurance carrier when they say you reopened and are no longer entitled to compensation when your income or sales are only 50% of the pre-pandemic levels? If you file a request for compensation in one way, your benefits might be lost because you did not ask for coverage under a different endorsement or definition. So it is important to file your request for coverage correctly. If you do not, the insurance company will not help you. Finding a lawyer who can file a proper claim for you is important.
Finally, if coverage is secured and benefits are to be provided, it is important to document your losses. Receipts, documents, photographs, cancelled checks, bank statements, accounting records need to be copied and available to fight for your benefits. Remember, the insurance company charged you money to provide coverage. You are entitled to receive the benefit of your bargain. It is right for you to be paid benefits as agreed. It is not fair for the insurance company to keep your insurance premiums and all or part of the benefits that are rightfully due to you under the insurance agreement.
Owning and operating a business is difficult. You work hard and you work smart to earn your money and keep your doors open. If you paid for insurance coverage from catastrophic losses, you should insist on being properly compensated as agreed under the policy. The pandemic has cost us all personally, financially and in some cases with the loss of life. If an insurance company is not treating you fairly or you don’t understand what your policy provides, an attorney can help you navigate through the claims process. If necessary, an attorney can even file suit for breach of contract and insurance bad faith.
The attorneys at Duarte Molina can help if you believe your business has a claim, and are offering free consultations. Call (210) 737-6676 to set up a conference call or Zoom meeting to see if they can help you and your business today.