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As Florida businesses begin to gradually reopen, it comes as no great surprise that businesses across industries have suffered during the COVID-19 pandemic. Florida business owners are likely all too aware of this reality. If you have business interruption insurance (often labelled “business income” coverage in your policy), it is important that you understand and seek out your rights under your policy.

The general purpose of business interruption insurance is to make the insured whole from a damaging event, compensating the insured for a loss income if a business suffers after a disaster. And yet, insurance companies across Florida are responding to claims for business losses arising from the COVID-19 pandemic with blanket denials, without even attempting to conduct an investigation in order to apply specific facts to the policy language. But this situation, which is highly fact and policy dependent, is not appropriate for rubber-stamp generic denials.

Commercial property policies vary in their terms, definitions and structure, and often include specialized or endorsed provisions. “Civil Authority” coverage may promise payment in contradiction to a virus exclusion. Extra Expense coverage may even apply as you attempt to regain profits that preceded COVID-19. As policyholders, you should examine your policies carefully in light of the circumstances and insist on coverage where appropriate. That is where the right lawyers come in.

Importantly, Florida court decisions support the conclusion that actual or threatened coronavirus contamination at or near insured property constitutes physical loss or damage triggering business interruption coverage. Further, state and local orders impairing access to insured property on account of the threat of COVID-19 or actual contamination may trigger civil authority coverage under property policies. Additionally, “standard form” virus exclusions may be unenforceable.

First, know that is it your duty to promptly report the loss to your insurance company, but it is your right, evidenced by the payment of multiple premiums, to be compensated by your insurance company in times such as these.

What Do I Need to Know in Order to Best Utilize Business Interruption Insurance?

Here are a few tips to help you navigate business interruption insurance:

  1. Obtain a copy of the insurance policy and declaration page. You, and/or your legal counsel, should review the policy for potential coverage. Business interruption insurance is typically included as part of a commercial property insurance policy. Policy wording is vital as this type of insurance is typically triggered when there is a “direct physical loss of or damage to” an insured’s property. Additional contingent coverage may exist depending upon the policy. Pay attention to covered causes of loss, exclusions and limitations.
  2. Time matters.You may have a deadline to report your claim within a certain window such as 60, 90, or 180 days. The clock starts running as of the date of damage. A phone call to your insurance provider along with a follow up email to memorialize the call is recommended.
  3. Documenting your loss.How has the business been affected by the damage? Documentation is needed to substantiate loss of sales, customers, extra expenses (e.g., payroll, material, rent, and replacement inventory to shorten period of restoration) and hard costs (e.g., legal and accounting). Documenting sales trends and business cycles before and after the damaging event is important to show the related losses.
  4. Documenting saved expenses.What expenses were not incurred as a result of the loss? Saved expenses include, but are not limited to, payroll, inventory, and utilities.
  5. Identify preliminary estimated period of restoration. The period of restoration starts at the date and time of loss. It ends when the business’s income is back to “normal” (e.g., inventory or production levels return to normal). This may be calculated in days, weeks, months, or years.
  6. Mitigation of losses.The business should attempt to mitigate losses to the extent it can. Mitigation examples include continuing to operate if possible, limit the period of restoration, or mitigate certain costs.
  7. Frequent communication.Ongoing communication with the insurance adjuster is important to address expected timelines for all parties and to cover additional items.
  8. Get your documentation ready.Insured parties often need help through forensic accounting experts to document their loss of business income for insurance. Tax returns, financial statements, sales forecasts, invoices, receipts, contracts, and exports/reports from accounting systems are a good start for independent third parties to document and/or verify the loss of business income.

As you seek remedies under your business interruption loss coverage, expect the insurance company to render a quick denial of your claim without exploring the specific circumstances surrounding your loss. However, the likelihood of a successful result will be increased when you understand your policy and submit a claim on a timely basis. The sooner you start the process, the better.

A specialized insurance attorney can examine your policy to analyze the definitions, interpretive rules, context or structural features of the coverage that enable you and your business to avoid or minimize the impact of such exclusions. These need to be examined closely. Also know that pursuant to Florida law, attorney fees are paid for by the insurance companies upon resolution of any claim, so you would not be responsible for any out-of-pocket costs. If you do not recover, you will not owe any fees.

If you seek further assistance in examining your rights to compensation for business losses due to COVID-19, please contact us for a free evaluation, so that we can advise you on your best approach to obtaining payment for your business income loss!

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