Coronavirus Closed Your Business; Can You Recover Your Losses?

Business Interruption InsuranceWith Coronavirus business losses mounting, compensation may be available through business interruption insurance.

Companies in Michigan and across the United States have and will be impacted by Covid-19, a strain of coronavirus. As of March 22, 2020, Michigan reported 1035 cases, up from 2 confirmed cases on March 10, 2020. Nationally, the number of confirmed cases is over 31,000.

Nationally, a growing number of states have ordered “lock-down” orders further limiting the activities of businesses and individuals. Michigan has not issued a complete lock-down, Gov. Whitmer ordered (2020-9) limits or complete closing of restaurants, bars, clubs, and other businesses supporting public accommodations. Specifically, this order closed or limited these businesses:

  • Restaurants
  • Cafes
  • Coffee houses
  • Bars
  • Taverns
  • Brewpubs
  • Distilleries
  • Clubs
  • Movie theaters
  • Indoor and outdoor performance venues
  • Gymnasiums
  • Fitness centers
  • Recreation centers
  • Indoor sports facilities
  • Indoor exercise facilities
  • Exercise studios
  • Spas
Loss of Business may trigger insurance coverage

No business means no income. But the loss of income for responding to governmental orders may be compensable through your company’s insurance. Specifically, many business insurance policy provide coverage for business interruption losses, if certain threshhold requirements are met. Also, these policies often provide coverage where a business closes under an order of “Civil Authority” where access is prohibited.

An important issue for both types of coverage is whether coronavirus will meet “direct physical loss or damage” requirement under the applicable insurance policy. On this point, the transmission of the virus and its ability to live beyond a host organism means COVID-19 does equate to the required direct physical loss or damage.

What you should do to obtain business insurance coverage?

Business owners will need to evaluate policy provisions and endorsements to determine if there is insurance coverage. They should immediately:

  • Consider their insurance options in response to business losses resulting from COVID-19 and coronavirus governmental mandated closures;
  • Review and understand your insurance policies;
  • Promptly notify insurers about your claim;
  • Take appropriate steps to mitigate loss; and
  • Begin to quantify potential damages for your claim.

As the effects of Coronavirus and mandatory government restrictions affecting commerce, policyholders should evaluate all potential avenues to coverage given the particular facts at issue to help their business survive this unprecedented circumstance. For more information about business interruption insurance coverage, contact insurance coverage attorney Jason Shinn. You can also call our business insurance coverage line.