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Fort Walton Beach Business Interruption Insurance Attorney

Business Interruption Insurance During COVID-19

To write that small businesses have suffered from the COVID-19 pandemic is an understatement. The American Property Casualty Insurance Association (APCIA) estimates that US businesses have lost between $255-431 billionso far due to the pandemic.

Small business owners are turning to their business interruption insurance policies, but insurance companies are refusing to pay for business interruptions instigated by COVID-19, leaving many small business owners high and dry.

At Dowd Law Firm, we know small businesses are the backbone of the US. If your insurance company refuses to pay for COVID-19-related business interruptions for your enterprise, we can help you take them to court and receive the funds you deserve.

For a consultation with our legal team, contact us onlineor via phone at (850) 972-2233.

Why Aren't Insurance Companies Paying for Business Interruptions?

Simply put: insurers don't think they can afford to pay for business interruptions prompted by the COVID-19 pandemic.

We mentioned earlier that business interruptions resulting from COVID-19 have already cost small businesses well in excess of $200 billion, and those costs are only escalating as the pandemic continues. To put that into perspective, business owners pay around $6 billion annually for property insurance lines, including business interruption insurance.

Commercial insurers would need to dig into the $800 billion reserves they collectively hold to pay for COVID-19-related business interruptions, which seems feasible at face value. However, digging into that reserve comes with risks for insurers:

  • Doing so sets the precedent that insurers will pay for COVID-19-related business interruptions. Since the pandemic shows no signs of slowing down and businesses continue to be interrupted, insurers would be roped in for the long run.
  • It also sets a precedent for future pandemics that most insurers would rather avoid.

In addition to setting precedents for how insurers should behave in the future, agreeing to pay for business interruptions resulting from COVID-19 could realistically devastate the insurance industry. According to Reuters, experts in the industry argue that paying for business interruptions caused by the pandemic could actually bankrupt the business insurance industryat large.

That may seem like an exaggeration, but keep in mind where things currently stand: The current cost of business interruptions from the pandemic alone is almost enough to eat up 25-50% of the reserves that commercial insurers own. As the pandemic continues to escalate, that percentage will only grow. If insurers agree to pay for business interruptions, they could find themselves financially crippled or unable to pay for a number of other claims.

As a result of these factors, insurers are pushing back against businesses attempting to claim business interruption insurance. Insurers such as Zelle have already released white papers describing why they aren't liable for business interruptions prompted by the pandemic.

What Can Business Owners Do to Claim Business Interruption Insurance?

Since insurers refuse to pay for COVID-19-related business interruptions, business owners are left with one option: sue their insurers.

If you choose to sue your insurer for business interruption insurance, you won't be alone. Seven states (including New York) are pushing for legislation that forces insurers to pay for business interruptions caused by COVID-19. Additionally, 18 lawmakers from four trade groups across the US are preparing to take legal action to achieve similar results.

At Dowd Law Firm, we provide our clients with high-quality, personalized legal assistance. We can help you understand whether you should sue your insurer and will fight for your right to business interruption insurance in the courtroom.

To request a consultation with our team, fill out our online contact form or give us a call at (850) 972-2233.

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