How to File a COVID-19 Business Interruption Claim in New York

If your business has been impacted financially by the global pandemic, your insurance policy may offer business interruption (“BI”) coverage to replace ongoing losses. To succeed on a claim, you need to carefully document your losses and comply with sometimes tedious policy requirements. It is also important to know the tactics insurers may try to use to deny your claim.

If the insurance company does not honor the terms of the policy, you may need to follow through with a lawsuit to get the money you are owed. In either case, a New York City business interruption insurance attorney can help you with your BI insurance claim.

When Can You File a New York Business Interruption Insurance Claim?

Your insurer is only responsible for losses covered by the policy terms. BI insurance, also known as business income insurance, is one type of first-party coverage often included in business insurance policies. The first step you need to take is to obtain a copy of your insurance policy and have a professional review it for provisions that may cover your situation.

Is a Loss of Business Claim Due to COVID-19 Covered Under My Policy?

A typical BI provision states something like:

“We will pay for the actual loss of business income that you sustain due to the necessary suspension of your operations during the period of restoration. The suspension must be caused by direct physical loss of or damage to covered property. The loss or damage must be caused by or result from a covered cause of loss.”

Insurance companies usually pay out BI claims for physical harm like fire damage. To save money, they interpret this narrowly, denying claims where there was arguably no physical damage. However, some courts have construed the physical damage requirement to be met in other ways when it comes to a viral outbreak. Provisions extending coverage for business shutdown by order of civil authorities can sometimes apply where traditional BI coverage does not apply.

Be aware that some policies exclude damages caused by a viral pandemic. Proposed legislation at the state and federal level seeks to change this. The outcome of these efforts is not yet known, but in the event that coverage is extended, claimants at the front of the line will fare better than those who file claims later.

Filing a Business Interruption Insurance Claim

You must follow the policy requirements to win your claim. This means giving notice, providing requested information, and documenting your losses. However, there are many pitfalls to watch out for in this process.

Some things to be on the lookout for include:

  • Notice – Policy terms usually require you to inform the company “promptly” of a claim. There may also be a deadline stated, but that will not matter if the company can argue that you delayed in a way that prevented the company from fully investigating the claim.
  • Provide requested information – You should never misrepresent your claim, but if you answer the insurance adjuster’s questions without understanding what they are looking for and why, the company will deny your claim. For example, if you respond that there was no physical damage without understanding that the coverage may depend on the unseen infiltration of the virus, you may box yourself out of coverage.
  • Document your losses – You need to know what is reimbursable and how to show it. It is better to know upfront what to document and how so that you collect what you need as you proceed.

A COVID-19-related BI claim is far from straightforward, so it is important to speak with a lawyer before embarking on a claim.

Business Interruption Claim Calculation

If the BI coverage applies, it will pay qualifying losses during what is termed the “period of restoration.” However, the policyholder has a duty to minimize its losses.

A claim will typically include lost revenue, which is reduced by the “saved expenses” that normally would have been incurred if not for the interruption. It also includes additional expenses that were incurred because of the interruption.

Proving a BI claim is more complicated than simply presenting receipts. Insurers will be looking at the historical success of your business as well as the sequence of events leading up to the interruption.

Speak with a New York City Business Interruption Attorney

After you have dutifully paid insurance premiums, you need the insurer to honor the safety net during this time of upheaval. If you are embarking on your BI claim or your NYC business insurance claim was denied, speak with an attorney at Douglas & London. Our attorneys understand the complexities involved in these types of claims, and we are here to help you fight for the compensation to which your business is entitled.

Call today to speak with a New York City business interruption insurance attorney. All consultations are free and confidential.