Business Interruption Losses: What Does Insurance Cover? A Miami Insurance Recovery Attorney Explains

A fire, flood, or other disaster could easily interrupt the ability of your company to operate business as usual, and if the interruption lasts for any real length of time, the loss could be enough to make you shutter your business. Thankfully, business interruption insurance exists for such situations. Its purpose is to provide businesses with the monetary help they need to stay afloat financially while their business becomes operable again. If you are counting on business interruption insurance being the safety net that protects your business in times of need, it is imperative that you know exactly what it does (and does not) cover. For questions regarding your particular policy, it is best to speak with a Miami insurance recovery attorney at our firm, Ver Ploeg & Marino. 

Common Expenses Covered By Business Interruption Insurance

While every policy is different, there are some basic expenses that are generally covered in a typical business interruption insurance policy. These include:

Lost Income/Revenue

How much would your company or business earn if it were open for business as usual? This is an expense that is usually covered by business interruption insurance. Previous financial records are used to prove this amount.

Additional Expenses

Business interruption insurance can also help pay for additional expenses, such as rent on a temporary office location, while the damaged location undergoes repairs. 

Mortgage, Rent or Lease Payments

Even though you are unable to conduct business as usual and earn income, your mortgage, rent, and lease payments are still due. During this time period, business interruption insurance can make these payments for you.

Employee Payroll

Even though your business is not creating any revenue, employees must still be paid or you run the risk that they will quit their jobs. Business interruption insurance can help by paying their wages until your business is up and running again.

Loan Payments

The payments your business is responsible for making do not stop when your business is unable to perform as usual. Business interruption insurance can make loan payments, such as a business loan, for you.

Employee Training Costs

Moving to a new facility may mean your employees have to learn to perform their job duties on new or different equipment. Business interruption insurance can help to pay for the training your employees may require.

Taxes

Quarterly and annual tax payments must still be made even if your business is not currently bringing in any revenue. Business interruption insurance can cover these tax payments as well. 

Common Expenses Excluded By Business Interruption Insurance 

While business interruption insurance does cover a considerable number of expenses, there are some common expenses generally excluded in these policies, including:

Flood and Earthquake Damage

Insurance companies require completely separate policies for damages caused by floods and earthquakes. These damages will not be covered by business interruption insurance. 

Short or Partial Interruptions

In order to qualify for business interruption insurance, your business must actually cease operations for a certain period of time. Scaling back operations will make your company ineligible for this type of insurance. Also, your policy will state exactly how long your business must be closed down for the insurance to take effect. In most cases, it is for 72 hours. 

Utilities 

If your business is unable to function due to extensive damage, there is no need for utilities, and they should be shut off. 

Contingent Business Interruption

You are only able to make a claim under business interruption insurance if your actual business is shut down. However, it is possible that your business could suffer if one of the vendors that provides you with items necessary to your company closes. This is considered a contingent business interruption, and it may be possible for you to obtain a separate insurance policy for these situations.

Property Damage

Damage to the property, or broken items, are not covered by business interruption insurance. Instead, there is a commercial property insurance policy in place for property damage.

Undocumented Income

Your business will not be able to recover for lost income that cannot be proven. Prior financial records are necessary to be able to recover for any income lost. 

Communicable Diseases

Most business interruption insurance policies will not cover the shut down of your business due to a communicable disease. To be certain whether or not communicable diseases are covered by your policy you should speak with a Miami insurance recovery attorney.

Business Interruption Insurance and COVID-19

A hot topic amongst insurers and business owners at the present time is whether or not business interruption insurance covers expenses incurred due to the shutdowns caused by the COVID-19 pandemic. Almost resoundingly, the insurers contend that it does not. While there are some cases heading to litigation to address this issue, the terms of the policy itself should be examined closely to see if this type of matter is addressed. If you have questions regarding your company’s policy, and whether or not there is business interruption insurance in place for losses sustained during the pandemic, you will need to consult with a Miami insurance recovery attorney.

Length of Coverage Under Business Interruption Insurance Policies

It is not uncommon for business interruption insurance to last for 12 months, although it may be necessary to ask for extensions beginning after 30 days. The length of time you have this coverage is known as the “restoration period” and your company’s policy should list your particular restoration period. 

Have A Miami Insurance Recovery Attorney On Your Side

If your company’s insurance company is denying coverage under your business interruption plan, or if you have questions regarding a business interruption policy for your company, we can help. At Ver Ploeg & Marino, our legal team focuses on helping policyholders with complex insurance-related matters. You may reach out to speak with a Miami insurance recovery attorney through our contact page.

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