Business owners are scrambling to stay afloat during the COVID-19 Coronavirus crisis. For some business owners, the company can no longer operate because of closure orders, and they have to shut down completely. In other cases, a company that supplies the business has disruptions in its operations that make it impossible to continue to run normally. When one company is dependent on other companies to do business, a disruption in a supplier, distributor or vendor can quickly have a chain effect.
Business Interruption Insurance Claims and COVID-19
As companies work to manage the fallout of the pandemic, business owners are turning to their insurance policies. If you’re a business owner, you might be learning all that you can about business interruption insurance. Our business interruption claim attorneys explain what contingent business interruption insurance is and whether you can make a claim for COVID-19.
About Contingent Business Interruption Insurance
Contingent business interruption insurance is a kind of insurance policy that pays a business when they cannot operate because of a disruption to a supplier, distributor or vendor. When a business depends on other companies and people in order to do their work, contingent business interruption insurance protects them in the event that a supplier or vendor suffers a disruption that causes a chain reaction.
You can make a claim for COVID-19 contingent business interruption if you have a policy in place that covers losses resulting from a supplier or vendor disruption.
Contingent insurance covers you if you cannot do business because the companies you depend on are no longer able to operate. Contingent business interruption insurance doesn’t cover you when your business directly has a problem. Instead, it covers you when there’s a chain reaction that starts with an outside company.
Some examples of contingent business interruption claims include:
- You run a meat processing facility. The company that supplies meat had to shut for 60 days because of a COVID-19 outbreak. As a result, you are unable to package and ship meat to grocery stores. You lose $300,000 in sales because of the disruption of your business.
- You run a car dealership. Because of the COVID-19 outbreak, the company that manufactures the cars that you sell is temporarily not making them. They’ve turned their attention to making masks instead. Inventory is delayed, so you don’t have as many cars to sell during and after the COVID-19 shutdown. You lose $100,000 net profit during the year.
These are just some examples of how a business may suffer losses that can trigger a contingent business interruption claim.
Are Physical Damages Required for a Contingent Business Insurance (CBI) COVID-19 Claim?
Physical damages are not necessarily required for a contingent business insurance COVID-19 claim. In the Fountain Powerboat Indus v. Reliance Ins Co. case, the court said that physical damages are not a requirement if the insurance policy language does not explicitly require physical damages. As in all insurance claim cases, coverage depends on the exact language in the policy itself.
However, in many cases, physical losses are not required as a basis for a contingent business loss claim.
Contingent Business Interruption Claims and Extra Expense
If you think that you have a contingent business interruption claim, you may wonder what you can stand to receive in your case.
Of course, your direct loss of income may be a part of your claim. However, sometimes your losses go beyond sales.
The insurance policy in place for your business may cover extra expenses. Here are the types of losses that may be a part of a business interruption claim:
- Lost income because you cannot make sales
- Payroll expenses
- Renting additional space, if needed
- Costs to minimize losses or make repairs
- Any cost for the period of time reasonably needed to mitigate losses and resume business operations
The policy may have a waiting period that applies, which typically runs from the first day of a sustained loss. Your business interruption insurance attorney can help you fight for fair interpretation of the policy, including any waiting period provisions.
Claiming Contingent Business Interruption Damages for COVID-19 Coronavirus
There are a few things to keep in mind when claiming contingent business interruption damages for COVID-19 and Coronavirus:
First, proving the type and amount of business losses can be critically important in any contingent claim. Demonstrating what losses occurred to a supplier and how those losses impact your operations is key to winning your case and receiving the fair amount of compensation. Our COVID-19 contingent insurance attorneys can assist you with gathering this documentation.
Second, the language of your insurance policy controls what is covered and what the conditions are. Not all insurance policies are created equally. While you might not remember now, you probably spent significant time initially choosing your insurance policy and the appropriate riders. It’s important not to make assumptions based on what’s usual or what might have been done in another case. The actual terms of your insurance policy are what matters.
Third, remember that COVID-19 and Coronavirus is a new problem for insurance companies and businesses making claims. If the insurance company tries to tell you that all COVID-19 claims are denied or that coverage doesn’t apply to you, that’s not always true. Our contingent business interruption insurance lawyers are happy to give you an unbiased, skilled legal opinion.
Contingent Business Insurance Interruption Claim Attorneys
Have you suffered a loss because of problems with a distributor or supplier? Are you wondering if you have a valid contingent business insurance claim? Has your business insurance claim been denied? Don’t give up!
The contingent business interruption lawyers at Adam S. Kutner, Injury Attorneys are determined to help every business owner receive the compensation that they deserve. We’re committed to helping you with every aspect of your case, including investigation, evidence-gathering, negotiating with the insurance company and contested litigation.
Our contingent business interruption attorneys don’t back down until our clients receive the best possible results.
Call us today for your free consultation.