While many companies hold Business Interruption insurance, most policies have endorsements that specifically exclude coverage for virus and bacteria issues and/or require physical damage to property. However, a few state legislatures are seeking to retroactively compel the insurance companies, who wrote business interruption policies in their respective states, to provide insurance coverage for COVID-19 business interruption.
To get a head start on recovering and resuming your business operations, take full advantage of existing assistance programs and keep thorough records of COVID-19’s effect on such aspects of your business such as debt incurred, funds lost and payroll. Detailed record-keeping will help you strengthen your case when filing a business interruption claim.
While the resolution of the COVID-19 coverage issue could take years to work its way through the courts, you should still consider making a claim and having it on record. If coverage is determined to be available, you will be in a position to collect it.
Prepare for a Favorable Recovery
A business interruption claim has a basic structure that provides a familiar framework for organizing information. A business interruption claim is organized around:
- Direct Costs of an Incident – All costs associated with containing, replacing, repairing and safeguarding equipment, facilities and personnel
- Maintaining Necessary Business Expenses – Costs associated with maintaining an affected business’ workforce and other operations
- Extra Expenses – Costs associated with overtime, additional rent and professional fees
In addition to taking advantage of COVID-19 relief programs, including the Small Business Administration’s Paycheck Protection Program, we urge you to get a head start on your Business Recovery Checklist.
For assistance assessing your circumstances and preparing petitions for relief, contact a Friedman advisor.