What You Need to Know About Business Insurance Claims & COVID-19

Business Insurance Claims and Covid-19

If you’re looking for COVID business insurance coverage, you aren’t alone. After COVID-19 devastated businesses, many hoped to tap into their business interruption insurance for some help. So far, those attempts have been mostly futile.

As passionate advocates for our clients, we understand how frustrating this can be. We want to share some industry insight and let you know what’s really happening behind the scenes in the world of COVID business insurance coverage.

Plus, we’ll discuss what you can do about it and share some tips to shore up your losses and get assistance in the meantime.

The Current State of COVID Business Insurance Coverage

When COVID-19 hit and businesses were forced to temporarily shut down, many hoped their business interruption (B.I.) insurance would help mitigate the losses. The challenge is that B.I. insurance is intended to be used when companies lose income while making repairs to their physical property due to damages.

In other words, the coverage is usually only triggered when there’s physical damage to the insured property. Other impacted companies looked into options aside from B.I., like the civil authority coverage clause and contingent property insurance, but they have also run into hang-ups.

The long and short of it is that COVID-19 was an incredibly unprecedented event, and most clauses and insurance plans are quite specific about what they will and won’t cover. Unfortunately, the type of loss from the coronavirus isn’t covered by many insurance plans.

The one exception to that might be with infectious disease business insurance coverage. If you had that in place pre-COVID, you might have a claim. Otherwise, businesses will have difficulty making B.I. insurance or any other insurance cover losses.

That’s why many companies are seeking litigation and taking the fight to the courts.

What’s Happening to Change Things?

Insured companies across the country have collectively filed over 100 federal lawsuits. Additionally, some states have introduced legislation that would force insurance companies to pay out COVID-19 related losses. These states include Massachusetts, New Jersey, New York, Ohio, and Pennsylvania.

100 federal COVID-19 business insurance lawsuits against insurers

So far, the rulings are mostly favoring insurance companies, and no state legislation has passed yet. Why is the judicial system ruling on the side of the insurers? Well because, if they require them to pay, it could bankrupt the entire insurance industry.

Essentially, all commercial insurance companies combined have $800 billion in reserves. If they were to pay out on virus-related losses, they would be completely unable to pay any other legitimate claims – like homeowner or auto insurance claims.

On a state level, the chances of legislation passing are looking grim. If insurance companies are required to pay out, then the company can just leave the state. Ultimately, bankrupting the industry will harm businesses by leaving fewer insurance options and driving higher rates in the future.

But what do you do if you need help now?

What Can You Do in the Interim?

It would be great if there were a secret COVID business insurance policy out there or some undiscovered clause. But that doesn’t seem to be the case. As with everything coronavirus-related, it’s important to adapt and look for other solutions.

Here are some steps to take if your coronavirus business insurance coverage is coming up short:

  • Step One: Make a plan and pivot your business offerings and services to keep your revenue coming in and your customers feeling safe.
  • Step Two: Stay in the loop on government legislation and help. You don’t want to miss out on government aid opportunities, like PPP loans, tax deadline extensions, and unemployment benefits.
  • Step Three: Look at all of your policies and make sure you don’t have infectious disease business insurance coverage or other clauses that might help mitigate losses. If you have doubts, reach out to your agent. Also, if you think you have a chance at winning a claim, there’s zero harm in filing one.
  • Step Four: Document all your losses just in case legislation passes that allows you to be compensated. Keep rigorous records of all your COVID-19 related losses.
  • Step Five: Consider applying for a disaster relief loan or search for local nonprofits or other organizations offering relief during this time.

Lessons Learned & Looking Ahead

The coronavirus pandemic was truly unprecedented. We’ll continue to deal with issues and unforeseen challenges for years to come. Now that we have gone through it, though, insurance companies will have to prepare and provide for these types of scenarios in the future. Consequently, this could be the beginning of more comprehensive and transparent insurance policies in the future.

Now is a great time to ensure you have the best infectious disease business insurance coverage and protection for your business. Reach out to Roger if you want help finding the best plan for your needs.