Now that the coronavirus pandemic is in full force, many small business owners are turning to their insurance agencies for help staying afloat. Unfortunately, those business owners are being denied the help they desperately need.
Most business protection insurance plans cover business interruption resulting from very specific and clearly defined occurrences such as natural disaster, fire, and unsafe structures. More broadly, it can also cover when a business is forced to close by a Civil Authority. This coverage can be used when your business is open or when it is forced to close. For example, if a fire breaks out in your neighborhood and your restaurant is spared, but one of your suppliers is forced to close, then you can use contingent business interruption coverage to defray the loss of revenue.
If your business interruption claim was recently denied by your insurance company, don’t worry. There are still ways you can fight back and get your business the help it deserves.
Completely Shut Down Your Operations
Restaurants remaining open for takeout and delivery during the pandemic are most likely to see their business interruption claims be denied because they are still operational, albeit at a much smaller capacity.
However, if the money you’re making from this operation isn’t enough to sustain your business, it might be better to shut down altogether and file a business interruption claim with your insurance carrier. This insurance policy is designed to replace your business income lost during a disaster. That means you must prove that your business revenue must be $0, not just reduced.
Furthermore, you cannot have access to your business during the disaster. This is the toughest part of the claim to prove currently. Most state’s Shelter In Place orders do not include traveling to work for critical businesses such as restaurants. However, if your jurisdiction placed you in a complete lockdown, then your claim is that much stronger.
Join Restaurant Collective in Legal Action
If your insurance company still won’t accept your business interruption claim, there is little else to do besides taking the matter to court. The good news is there are several restaurant collectives you can join that are currently suing insurance companies over their business interruption claims.
In California, famous chef Thomas Keller is currently suing his insurance company for denying his business interruption claim. Keller, who operates three restaurants in Yountville including his esteemed French Laundry, had to furlough all of his 450 employees because of the state’s strict Shelter In Place order.
Restaurant owners in Louisiana and Virginia are also suing their insurance companies to release payments for business interruption claims. One insurer in their crosshairs, The Hartford, is withholding payments even though its policy specifically states it will pay for “direct physical loss or direct physical damage” caused by “‘fungus’, wet rot, dry rot, bacteria and virus.”
Hartford responded to the lawsuit by asking the government to start a recovery fund backed by taxpayer dollars.
Oceana Grill in New Orleans sued Lloyd’s of London seeking a declaratory judgment that the insurer should have to pay for business damages resulting from the coronavirus pandemic. Louisiana’s governor and the mayor of New Orleans issued orders that limited operating capacity for restaurants. According to the lawsuit, the policy Lloyds used to insure Oceana does not specifically exclude losses resulting from pandemics or viruses.
Call Your Representatives
After the 2006 SARS outbreak, many insurance companies added provisions to their policies excluding coverage for losses resulting from “virus or bacteria.” These provisions are very broad, which is why lawyers are currently asking judges around the country to interpret their meanings.
But this process is excruciatingly drawn out and does small business owners no good, especially when they face little relief from their mounting debts and losses. That’s why legislators in both state and federal governments are crafting legislation to force insurance companies to pay for business damages caused by the coronavirus.
In New Jersey, Democratic assemblyman Roy Freiman introduced a bill that would do just that. His idea is to tap into a pool of money set aside for catastrophes. Similar legislation was passed after 9/11 and Hurricane Katrina. The bill would cover businesses with up to 100 employees that work at least 25 hours per week.
On the federal level, Democrats are crafting the Business Interruption Insurance Coverage Act of 2020, which would require insurance companies to pay for “business interruption losses due to viral pandemics, forced closures of businesses, mandatory evacuations, and public safety power shut-offs, and for other purposes.”
And while these pieces of legislation ae being debated, lawmakers need to hear from their constituents, especially the small business owners they will help, in order to make the legislation pass. Be sure to make your voice heard around your local statehouse if your business needs help staying afloat.