Why Your Business Interruption Insurance May Cover Claims for Lost Profits and Ongoing Expenses Arising from the COVID-19 Stay At Home Orders

April 3, 2020

Business Insurance claims for lost profits arising from COVID-19

By Thomas Neville

The restaurant industry is one of the largest sectors of the US economy, pumping over $1 trillion into the U.S. economy and employing over 15 million people.  The coronavirus epidemic has hit the industry hard.  How hard?  The National Restaurant Association is projecting that the industry’s sales will drop by nearly 25%, and one-third to one-half of those employed in the restaurant industry will lose their jobs.

It’s not just the restaurant industry that is being impacted.  All Coloradoans have been asked to stay at home to limit the spread of the COVID-19 virus.  While these steps are necessary to limit the spread of COVID-19, they are also causing economic losses throughout the state.  It’s enough to make you wish there was some kind of insurance against these losses.

What if I told you there was?

Not only is there insurance that may protect against these losses, but many business owners already have it.  It’s called Business Income Insurance or Business Interruption Insurance.  Its purpose is to help step in if a business is forced to close due to property damage (which may include COVID-19) or a government order closing businesses due to property damage to nearby properties. If it applies, it will provide replacement coverage for the business’ ongoing expenses, including wages for employees, health insurance premiums, and rent, as well as the business’ lost profits for a period after it is forced to close due to property damage or an action by a civil authority.  And contrary to what you may have heard, in many cases Business Income Insurance will provide coverage for losses caused by the COVID-19 pandemic.

Now, you may have heard from the media, or your insurance agent, or an adjuster, that your policy doesn’t cover business income loss from this pandemic.  And that might be true.  In 2006, many insurers did incorporate “virus” exclusions into their policies.  But many insurers did not.  And those that did may not have done so in an effective way.  Consequently, the only way to be sure is to conduct a careful analysis of the policy’s terms.

The lawyers at Ogborn Mihm are prepared to help you determine whether your policy may provide coverage for your business losses.  If it does, we’re prepared to help you make your business interruption claim. Contact us (303) 592-5900 today for more information.