Business Interruption

On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which may provide needed stimulus to small businesses like yours. This law, which is the third major piece of bipartisan legislation to address the crisis created by the COVID-19 pandemic, includes approximately $2 trillion in assistance to individual and businesses. If your business qualifies, you may be able to receive “grant” loan benefits from the government that will cover your payroll and provide you with partially forgivable loans.

Businesses that were forced to close or limit their services have been suddenly and severely damaged by the COVID-19, and need help now. As quickly as the virus has spread, so have questions from business owners about whether their commercial property insurance covers these losses in whole or in part. Additionally, the Federal Government has taken action intended to provide financial relief for both individuals and businesses as a result of the COVID-19 Pandemic.

The last time the Government took such action was after the BP Deepwater Horizon tragedy which happened in the Gulf of Mexico in April 2010. And even though that event was quite different than a global pandemic, the result was the same because thousands of businesses along the Gulf coast, from Florida to Texas, sustained heavy losses. As a result of representing hundreds of businesses affected by the BP oil spill, lawyers including myself learned many lessons about the best way to approach and deal with insurance companies and the Federal Government- with the goal of maximizing each client’s recovery. My best advice to any business that has been affected by the ongoing Pandemic is to hire a lawyer experienced in handling these situations- as I have for the past 30 years.


Business Interruption coverage is contained in some (but not all) commercial insurance policies. and the specific language in each policy, as well as the wording of any exclusions that might arguably apply, are key in determining whether any particular business has a claim for business interruption benefits. Unfortunately, solving the insurance puzzle and figuring out which circumstances are and are not covered can be rather complex.

Generally speaking, Business Interruption coverage is intended for business that sustained decreased or lost earnings caused by a covered peril that forces business operations to cease. If you have to shut down your business due to a covered loss—generally due to physical damage that has occurred, like water damage or a fire—the insurance company covers both the fixed costs and the business’s profit losses until the property is once again functional. The key to such a claim is determining what constitutes “direct physical damage.”

If you have to shut down your business due to a covered loss—generally physical damage that has occurred, like water damage or a fire—the insurance company covers both the fixed costs and the business’s profit losses until the property is once again functional. The key to the claim is determining what constitutes “direct physical damage.”

In the case of the Novel Coronavirus, you may think that the virus poses a direct threat to your business, but does that mean that the virus made your business inoperable? It’s a tough call. And what about exclusions that are commonly found in business insurance policies, that exclude coverage for losses caused by contaminants and/or pollutants? Would the virus fit into these categories? And even if such a claim ends up being covered, what specifically does it cover? Might a recovery be limited to the cost of sanitizing the insured property to make it safe? As you can see, these cases are anything but simple- and these are but a few of the issues and arguments likely to be raised by insurance companies facing perhaps millions of claims from the COVID-19 Pandemic.

In anticipation of insurance companies trying to do everything they can to not pay business interruption claims. That’s why a bipartisan group of U.S. Congressmen wrote a letter to insurance company leaders- urging them to pay claims for Business Interruption. Sadly, but not surprisingly, the Insurance industry’s response was that Business Interruption coverage was not designed to cover communicable diseases. In summary, the COVID-19 Pandemic presents complex issues with no clear-cut answers.

If you, like so many others, are in this situation, it’s important to pursue the details. Perhaps insurance companies will differ in the criteria they use to determine applicability. Maybe some policies are worded differently than others. And it’s possible that the courts will side with policyholders on this question. In an issue this complex, there is no one, clear-cut answer. Though your insurance company may assure you that your business isn’t covered under these conditions, don’t despair.


That said, don’t despair if your insurance company tells you that your business isn’t covered. Rather, get your claim started now, with the help of an experienced insurance claims attorney.

The team at Larry Moskowitz P.A. will analyze your insurance policy and help you apply for, document and pursue claims for all monies you are entitled to – whether from your insurance company or the Government – or both. I have devoted my career to fighting insurance companies on behalf of businesses like yours.

Call us today to schedule a FREE telephonic consultation. You will not owe us anything if we do not prevail. No fees or costs if we do not collect.

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