What Does Business Interruption Insurance Cover?

In its broadest form, business interruption insurance reimburses lost revenues and ongoing expenses when the business cannot operate due to some disaster or calamity– referred to as “covered losses.” Many businesses have filed claims under their insurance policies for revenue interruptions resulting from the COVID-19 pandemic in the first half of 2020, only to have those claims denied as not being within the scope of a covered loss.

New York businesses whose claims have been denied should consult with a New York City business interruption insurance lawyer to determine their options. Coverage questions are always a function of the terms and conditions of the insurance contract. Understanding what your policy covers is the critical first step toward successfully filing and prosecuting your claim.

What Types of Covered Losses are Included in Business Interruption Insurance Policies?

Commercial insurance policies frequently tie liability coverage to property damage. If a business’s premises are temporarily unusable due to a fire or flood, for example, business interruption insurance will replace lost revenues. It will also cover regular expenses while the premises are under repair.

Given this property connection, commercial insurers have denied many of the first COVID-19 business interruption claims because no physical property damage has resulted from the quarantine and social distancing orders that have shuttered many businesses. In response, lawyers and state legislatures are challenging those denials based on other insurance contract provisions, including civil authority coverage.

What Revenues and Expenses Will Business Interruption Insurance Replace?

Even with no ongoing business operations, an organization will continue to incur regular fixed expenses that are independent of revenues. To that end, business interruption insurance should cover at least a portion of those fixed expenses as defined in specific policy language, including:

  • mortgage or rent payments
  • utilities, and costs for common area maintenance and repair
  • payroll costs for employees that have not been laid off
  • tax payments
  • expenses to maintain regular advertising and marketing campaigns.

How Do Commercial Insurers Calculate Business Interruption Reimbursements?

Business interruption insurance payments will be a function of the financial records and data that a business can produce to demonstrate its regular income and expenses. A business that keeps monthly profit and loss statements, inventory summaries, payroll records, and other objective income and expense documents will likely recover a greater portion of its losses.

In every case, a knowledgeable and experienced attorney is best able to protect the business’s interests and to negotiate larger reimbursements from its insurers.

How Does an Organization Know if It Should File a Business Interruption Claim?

Early news reports about business interruption insurance claims related to COVID-19 quarantine orders have discouraged many businesses from pursuing claims. This is particularly true if their policies have virus exclusion provisions or other riders that limit or eliminate coverage for pandemic-like events. Organizations that have been paying business interruption insurance premiums, however, should not forfeit the benefits that they paid for with those premiums. 

New York businesses that are on the fence over whether to file a claim should call Douglas and London for assistance in reviewing their policies as well as the scope and extent of any claim that they might file under it. We can also help a business to file and prosecute its claim and to negotiate with insurers for improved coverage and larger reimbursements.

Contact Douglas and London today

The attorneys at Douglas and London represent businesses throughout New York State to receive the full reimbursements and benefits that they are entitled to receive. We will fight tirelessly to recover the largest available business interruption payments for our clients, particularly for the losses they have incurred due to the COVID-19 shut-downs and quarantines.


  1. www.usnews.com: What is Business Interruption Insurance?  https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/what-is-business-interruption-insurance
  2. www.coverwallet.com: What is Business Interruption Insurance? https://www.coverwallet.com/insurance/business-interruption-income-insurance
  3. www.accountingfreedome.com: Business Interruption Insurance: Best Practices When Filing a Claim. https://www.accountingfreedom.com/best-practices-when-filing-a-business-interruption-claim/