COVID’s Effect on Business Interruption Insurance

Many businesses in the United States are feeling the impact of the coronavirus (COVID-19) pandemic. Out of about 30 million small businesses across the nation, approximately 7.5 million small businesses may be at risk of closing permanently within the next couple of months. Fortunately, your business interruption insurance may help replace the lost income and pay for additional expenses if the business operations were interrupted by the pandemic.

If your business has been affected by COVID-19, and you would like to use your business interruption insurance to cover your losses, consulting with an experienced business litigation attorney is crucial for detailed guidance. Attorney David Schwartz can help you understand the effects of COVID-19 on your business interruption insurance coverage, assess your situation, and discuss your options going forward.

The Law Offices of David H. Schwartz is proud to represent business owners throughout San Francisco, San Mateo, Santa Clara, San Jose, Oakland, and the San Francisco Bay Area of California.

Overview of Business Interruption Insurance

Business interruption insurance is coverage that helps replace lost income and pay for extra expenses when a business shuts down temporarily, suffers after a disaster, or is affected by a covered peril. Covered perils typically include theft, fire, lightning strikes, wind, or falling objects. 

What Does Business Interruption Insurance Cover?

The business interruption insurance may cover the following:

  • Lost Income: The policy covers income your business has lost due to being shut down temporarily.
  • Relocation Expenses: Relocation expenses to move your business to a temporary location so as to continue business operations.
  • Missed Rent: Rent that you lost because you could not use your property for business operations.
  • Civil Authority Ingress/Egress: The policy also generally covers loss incurred when a governmental authority restricts access to your business.
  • Extra Expenses: Other additional expenses required to continue operating the business while you recover including:
    • Employee wages or salary
    • Business taxes
    • Loan payments

What It Does Not Cover

The business interruption insurance policy only covers financial losses and does not cover the material property damage. The policy will not cover the following:

  • Undocumented income that is not listed on your business’ financial records
  • Broken or lost items from a covered event
  • Flood or earthquake damage. These are covered by another policy
  • Utilities
  • Communicable diseases, pandemic, or viruses

The COVID Factor - Why Claims Are Being Denied

Several insurance companies have released statements informing policyholders that coronavirus-related business interruption claims are not covered by their insurance policies. Perils that happen to a large number of policyholders concurrently are often excluded from insurance coverage. According to insurance companies, the primary reason for claims denial amid COVID is that the overall cost may cause the insurance industry to collapse.

California Assembly Bill 1552

California Assembly Bill 1552 was designed to protect the financial condition of businesses that were forced to shut down or limit business operations as a result of the COVID-19 pandemic. The bill will create important rebuttable presumptions that affect the burden of proof and support coverage for policyholders in their COVID-19 business interruption claims.

Under the bill, the courts would be required to presume that for any business interruption caused by closure orders:

  • COVID-19 was present on the insured’s property and caused physical damage to that property.
  • COVID-19 was present on any property located in the geographic location covered by a civil authority’s order and had caused physical damage to that property.
  • COVID-19 was present on the property of a third-party and caused physical damage to the property, thus preventing the ingress and egress to an insured’s property.

How a Skilled Attorney Can Help

Closings and additional business disruptions due to the COVID-19 pandemic have resulted in potential loss of income for businesses across the nation. During a crisis, businesses usually look carefully at their insurance policies for potential coverage for such business income losses. If your business has been affected by COVID-19 and you would like to use your business interruption insurance to cover your losses, or if you were denied, delayed, or underpaid claims, it is crucial that you retain an experienced California commercial litigation attorney immediately.

Attorney David H. Schwartz is well-versed in handling matters of business interruption insurance claims. He will review your case, analyze the provisions of your insurance terms, and examine the circumstances of your business closure. Where feasible, he will then gather the necessary supporting documents and help you file your business interruption claim. Mr. Schwartz can provide you with the experienced legal guidance, advocacy, and vigorous representation you need.

Hire an Experienced Commercial Litigation Attorney in San Francisco, California

If you encounter issues regarding COVID-19 and your business interruption insurance claims, contact the Law Offices of David H. Schwartz to schedule a one-on-one consultation. Attorney David H. Schwartz can help you exercise your rights as a policyholder. He can fight vigorously on your side to protect your business and help you recover your rightful compensation. Mr. Schwartz proudly serves clients throughout San Francisco, San Mateo, Santa Clara, San Jose, Oakland, and the San Francisco Bay Area of California.


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