Can I Claim Business Interruption Loss Insurance if my Business is Still Open?

There’s a lot of talk about business interruption insurance right now. And for good reason. Many businesses have dutifully paid their insurance premiums for years, hoping they would never need it, but expecting that if they ever did need it, the insurers would pay up. But now, when businesses do really need it, the insurers are denying claims for business interruption coverage.

So far, much of the focus has been on businesses that have shut down completely. Often, these “non-essential” businesses have been ordered to close by the government, or their employees have been ordered to stay at home.

But what about businesses that remain open as “essential”? What about businesses that remain partially open? For example, in my city, some restaurants are closed for dine-in but remain open for delivery and take-out.

Can They Make an Insurance Claim for Business Interruption Loss?

The insurance companies will likely say “No.” But we have learned that we should not just take the insurance companies’ word for it.

The real answer is, maybe. It depends on the specific situation and, as always, what the policy says.

In fact, many commercial insurance policies contain language that might provide business interruption coverage even if there is not a complete shutdown.

For example, a fairly typical business interruption policy might say that the insurer will pay for the actual loss of income a business suffers due to a necessary “suspension” of its operations. There may be other considerations and conditions that apply, but for purpose of this post, let’s focus on the word “suspension.”

A business owner might look at that word “suspension” and throw in the towel, thinking, “Well, I’m still partially open for business so I guess my operations haven’t been suspended.”

Think again. The policy may define the term to mean something broader – something that may help you. For example, some policies define the word “suspension” to mean: “the slowdown or cessation of your business activities.”

Your Business may not Have Ceased or Closed its Doors Completely. But has it Slowed Down?

There are usually other factors involved in determining whether insurance coverage exists for business interruption losses. But don’t assume that just because you’re keeping the lights on means you don’t qualify.

We are actively investigating insurers for wrongfully denying coverage of business interruption losses during COVID-19.

Read more about our business interruption insurance practice or contact us here.

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