What Does Business Interruption Insurance Cover?
Business interruption insurance covers certain losses in the event of a natural disaster, as well as other qualifying events. For example, if a hurricane floods your business, you can get coverage to make repairs. However, this is not all that business interruption insurance includes.
This insurance is differentiated from regular commercial claims in that it will cover the lost income that your business would have made if it had been able to stay open. While property insurance policies cover physical damage, business interruption policies will cover the estimated cost to company profits. All businesses may apply for this kind of coverage.
Typically, businesses will elect to have a business property insurance policy and add business interruption to that policy. In some cases, these may be a packaged deal. If you live in Texas and you own a business, it may be wise for you to obtain business interruption insurance. In the event of a natural disaster, this kind of coverage is designed to put your business right back to the financial position it was in before the damage.
Understanding Insurance Bad Faith
Business interruption insurance ensures that your financial losses are covered in the event that you must stop your business operations due to a natural disaster or some other type of qualifying event. You do not want to be left out to dry when you’re forced to shut down for an extended period, which is precisely why you have faithfully paid for your policy. But what happens when you have taken all the necessary measures to obtain coverage for your business, and your insurance company is denying your claim? There is a defense against these bad faith practices.
Insurance bad faith occurs when an insurance company fails to uphold its obligations to a policyholder. Examples include:
- Wrongfully denying or delaying claims
- Misrepresenting the terms of a policy
- Failing to provide a reason for denying a claim
- Refusing to conduct a reasonable investigation
- Delaying an investigation into the claim
- Failing to pay once liability has been established
If you believe an insurance company is wrongfully denying your claim, you can seek legal help. At Arnold & Itkin, we stand up to insurance providers that engage in bad faith practices—and we have a proven track record of success in collecting the payments are clients are owed.
How We Can Help with Your Business Interruption Claim
Wind, rain, mold, mud, and debris from hurricanes and tropical storms can inflict significant property damage, both to homes and businesses. Roofs, foundations, drywall, insulation, and garages may all need repairs in a storm's aftermath. However, some losses are unique to businesses, such as damage to equipment, machines, computers, inventory, and business records.
Additionally, businesses may experience severe disruptions in the flow of supplies and customers. Those disruptions can last for months or even years. This is where business interruption insurance comes into play.
When an insurance company tries to deny or delay payments, we can offer legal help with these issues:
- Apportioning Damages: While a business policy may cover wind and rain damage, it may exclude coverage for flood damage. Our team can inspect and examine your property to make sure there is a fair apportionment between your covered and uncovered losses.
- Extended Period of Indemnity: As it may take time before business returns to its pre-storm revenue levels, a business insurance policy often allows the insured to recover losses for a period after the business has reopened. An insurance company may try to shorten this period or argue that the losses are due to more extensive economic conditions and not a direct result of the qualifying event.
- Contingent Business Interruption: Your business policy may allow you to recover losses connected to third parties, such as an interruption in your supplies or loss of services, like power and water. Insurance companies can contest whether these factors directly cause your losses.
Our attorneys can review your policy to determine the extent of your coverage, calculate deductibles, and identify unique business clauses in your policy that should entitle you to compensation. For instance, most businesses will have "business interruption" coverage, which compensates for loss of income during the period when repairs are made (or the "restoration period"). If your insurance provider is refusing to pay your claim, we can help you understand your legal rights and options.
How Long Do Business Interruption Claims Usually Take?
Business interruption claims can take anywhere from several months to a year or more before a business owner sees a cent of relief. Because business interruption claims depend on your company’s forecasted earnings, insurance companies have plenty of leeway to argue about the size of your claim—tying up the process for long periods of time. The insurance company’s forensic investigators can claim that your normal or expected revenue is much lower than you estimated, even if your business was struck down during a slow month or right before a busy season.
However, the true degree of your losses can be immense. Extended periods of business interruption can lead to damages such as:
- Loss of employees
- Loss of customers
- Loss of access to offices
- Damage to physical locations/offices
- Diminished supplies
Due to the significant loss of revenue and equipment that disasters normally incur, the size of an average business interruption claim exceeds $1 million—even for a small business. A large portion of the losses caused by hurricanes come from local business’ loss of revenue: of Hurricane Katrina’s $25 billion in business losses, $6-9 billion was from interruption of operation and earnings.
Recovering Business Losses After Hurricane Damage
Since 2005, the Gulf Coast region has been slammed by two of the costliest hurricanes in U.S. history: Katrina, which exacted an estimated $110 billion in damages and Ike, which produced nearly $30 billion in losses. Then, in 2017, Hurricane Harvey hit. Businesses throughout Texas, Louisiana, Mississippi, Alabama, Georgia, and Florida suffered the most substantial damages to their property, equipment, and inventory. Unfortunately, attempts to collect money from insurance providers have too often been met with delays in payments or denials of legitimate claims.
Arnold & Itkin has a record of protecting the rights of business owners in disputes with insurance companies. Our Texas business interruption attorneys know the unique insurance issues that businesses face, and we use a nationwide network of resources and experts to seek successful verdicts and settlements in our clients' favor.
Oil Spills and Business Interruption Claims
Business interruption insurance is supposed to help cover economic losses when an event beyond your control causes you to be unable to operate your business. However, many business owners are finding that either their insurance policies do not cover losses resulting from oil spills, or the insurance companies are finding ways to avoid paying for damages. Many insurance policies fail to cover damages resulting from environmental disasters. This is unacceptable.
Arnold & Itkin represents clients in Texas and the Gulf Coast region in business interruption cases resulting from the BP oil spill, as well as other catastrophic spills. Our business insurance claim attorneys know that many companies suffered tremendously, and the economic toll continued to rise in the aftermath of the BP oil spill. We also believe that when one company's negligence causes your business to suffer, you have the right to file a claim for economic damages—which is why our law firm formed a Deepwater Horizon Oil Spill Task Force to evaluate and investigate the commercial damages.
If you were affected by the BP oil spill or another catastrophic spill, reach out to our team right away for help with your insurance claim.
Our Business Interruption Attorneys Are Here to Help
At the heart of an insurance contract is a promise: your insurance company agrees to take your monthly premiums in return for the assurance that they will pay for your losses in a disaster. If an insurer refuses to uphold their end of the deal (or your insurance agent knowingly sold you a policy that would never benefit you), that’s not only unethical—it’s illegal. Unfortunately, that’s exactly what insurance companies are doing.
If you are a smart business owner who possesses a business interruption policy, then you should not be punished for faithfully investing in a policy that should have helped you in times of trouble. What will often happen in the case of widespread disasters is that insurance companies will be overwhelmed by how many claims are coming in. They might deny some claims or put others off or even supply just partial payment to policyholders. This constitutes insurance bad faith, and there is a defense against these practices.
At Arnold & Itkin, we have experience in getting our clients the money that they deserve from their insurance policies. We invite you to get in touch with our firm today if you have business interruption insurance, but your claim has been denied. If you need help with a business interruption claim, a Texas business interruption attorney at our firm is ready to handle your case. We will work hard to seek the compensation you deserve so you can prevent further damage to your business during this extremely challenging time. Whether you need representation or just have questions, we can help provide you with the right recommendations.
Contact our firm today for more information: (888) 493-1629.
