Business Insurance Coverage Options for Recouping Losses

Business interruption (BI) insurance is just one avenue being explored by businesses currently assessing any current or future losses caused by COVID-19. Another possibility is Civil Authority coverage, which could address the restrictions placed on certain businesses by the government. Finally, a third option is called Contingent Property or Dependent Property coverage, which pertains to products, components or services not received by a certain supplier. 

All these options, however, refer in some way to property damage, and the recovery of losses during the time required to repair it. Many insurance providers are expected to oppose coverage of Coronavirus related BI, Civil Authority, Contingent Property or Dependent Property claims.  For the time being, the best way for a business to recover its losses may be infectious disease coverage. It is still not certain whether the presence of the virus or the threat of contamination will be enough to trigger business income coverage.

The burden of proving that the presence or threat of contamination constitutes some nature of property damage will fall upon lawyers, but there are still measures that you can take in the meantime.

First, you will need to mitigate your losses. Restaurants need to continue to reassure customers of their safety on their premises. Businesses that depend on someone else’s products need to find alternative suppliers.

Keep an eye on the daily news. It is important to stay informed regarding any updates regarding state and federal regulations and restrictions. While this can be overwhelming, it is the only way to ensure you are in compliance.

Next, there is unemployment to consider. Should partial claims be filed for employees whose hours have been cut? Check with the state for answers.

Rest assured, documentation will be required to support insurance claims. Be diligent and record what you believe to be COVID-related losses. This information may include the following:

• Historical and current annual financial statements
• Federal and state annual tax returns
• Monthly profit and loss statements
• Budgets, forecasts or projections done prior to and after the event
• Monthly bank statements
• Inventory reports
• Payroll records
• Invoices and purchase orders
• General ledger accounts established to account for any expenses related to the loss, such as additional payroll, shipping, temporary facilities, etc.
• Documentation to support extra expenses including receipts, invoices, time sheets, advertising costs, etc.

Small business lawyers are working around the clock to ascertain all relevant information to communicate to their clients. Just know that if you own a business and are struggling to keep your head above water, there are professionals ready and willing to help.

For more information regarding the above-mentioned insurance coverages, consult your local insurance agent.