Can Restaurants file 'business interruption' claims due to the COVID-19 pandemic?

Quite a sizable number of people still ask “why bother to pay insurance premiums?” Well, for obvious reasons....because we don’t know when we may need them. For restaurant owners, when you have paid thousands of dollars into an insurance policy, you expect they will have your back when you need it most. 

This is why restaurant owners put substantial insurance investment into purchasing “business interruption” coverage. This insurance policy is supposed to cover business owners in case something beyond their control forces a shutdown of their operations.

With the coronavirus pandemic and subsequent “shelter-in-place” and lockdown orders, many restaurants have joined other ‘non-essential’ businesses in shutting down business. But, can the ‘business interruption’ cover this particular incidence? Are insurance companies obligated to pay out claims to policyholders?

You may be entitled to financial compensation for the ‘business interruption’ you’re currently experiencing. An experienced business interruption attorney at Oshan and Associates can help you look into your insurance policy and offer insights on your insurance policy.

Business interruption claims and how it affects your restaurant

Business interruption policies also known as ‘business income insurance’ generally cover the loss of income a business suffers after a ‘disaster’. This is a more advanced insurance coverage to ‘property insurance’ that only covers the physical damage to the business.

In most business interruption policies, the insurance will cover loss of net income during the time an operation is closed or partially suspended. This will include closure due to:

• Civil authority,
• Communicable disease,
• Physical loss or damage, etc.

The ‘civil authority’ coverage may be the tightest fit for you as a restaurant owner to lay claim to your benefit. The loss of income resulting from the lockdown directive due to the coronavirus pandemic can be interpreted to be within the coverage of your insurance.

Even more so, there are some “all-risk” policies that are meant to cover every single risk your restaurant could experience.

Unless your business interruption policy explicitly excludes ‘viruses’, ‘pandemics’, ‘loss of use’, ‘contamination or pollution’, etc., the insurance company may be under obligation to pay you your claim.

Protecting your restaurant during the COVID-19 pandemic

As is well-known, insurance companies don’t pay out benefits to every policy holder that just as much as lays claim to it. In fact, the industry makes billions of dollars a year by denying claims.

Unlike many others, the insurance policies of restaurants cover a wider range of business interruption. Insurance companies have argued that paying all the business interruption insurance claims of restaurant owners will be too 'overwhelming'. This is why insurance companies are now denying claims filed by some business owners.

But this argument doesn't hold much ground. In fact, it may qualify as insurance bad faith. The first priority would be to ensure insurance companies fulfil their obligations to your policy.

A number of states including Ohio, Massachusetts, New Jersey, New York, and Pennsylvania now have legislation in progress that would require 'business interruption' policies to cover the Coronavirus pandemic.

The draft Pandemic Risk Insurance Act would also require insurers to cover business losses due to a pandemic. This will require the federal government to serve as a backstop if their payouts exceed $250 million.

Should you file a business interruption policy claim to cover COVID-19?

It all completely depends on the particular language of your policy. If your policy doesn't specifically strike out pandemics - which it doesn't in most cases - then you should submit a claim.

If you're not sure whether or not your insurance policy protects your restaurant in the pandemic, you should get in touch with an insurance claim lawyer as soon as you can.

In this case, you'll be required to submit a  “proof of loss” form showing the amount of loss your restaurant suffered.

If the insurance company denies your claim, you can still seek a declaratory judgment that would mandate the insurer to pay your insurance claims. This benefit may also include damages for breach of contract as well as 'bad faith' on the part of the insurer.

Get in touch with an experienced insurance claim attorney today

Most business interruption policies contain provisions on the timing to file a claim.

Even if you have filed a claim and it has been denied, an experienced insurance claim attorney may still be able to negotiate your claim or file a suit to make sure you get the benefit you deserve.

At Oshan and Associates, our skilled business interruption attorneys know how to navigate insurance claims. Our attorneys in our offices in New York, Washington, Pennsylvania, Illinois, California  & Puerto Rico are up and ready to get your insurance claim to you.

Get in touch with us in our offices. You can contact us online for a free 'no obligation' consultation here or call us at (206) 335-3880 or (646) 421-4062.

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