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Small businesses are the lifeblood of the U.S. economy – accounting for 99% of all businesses in our country. Small businesses make-up more than two-thirds of the new jobs and 44% of our country’s economic activity. The COVID-19 outbreak has struck an unprecedented disruption to our economy with most small business being forced to lay off workers and shutter their doors during the pandemic. The recovery of these small businesses is critical to restarting our economy. However, the welfare of these small-businesses and the U.S. economy are being threatened by the insurance industry.
About one-third of American small businesses have business interruption coverage. This type of insurance can provide coverage for lost income, operating expenses, or additional expenses suffered by a business whose operations are disrupted by an unexpected event, such as a fire, natural disaster, or a government mandated shutdown like with COVID-19. The coverage is not usually sold as an independent policy, but added on or bundled in a business owner’s policy. Many business owners may not even know they have such coverage.
There are variety of business loss coverages offered by insurance companies. Some of the more common insurance that may provide coverage for COVID-19 related losses include:
This provides coverage for lost business earnings and/or covers extra expenses that result from business operations being disrupted or shutdown due to a covered cause.
Many businesses struggle to regain their prior levels of income following a disruption/shutdown caused by a covered event. This type of coverage helps replace the income loss while building the business back to pre-shutdown levels.
Many businesses depend on third parties to operate. If a third party is unable to operate and supply or support a business relying on it, this coverage can help cover resulting losses.
This coverage is offered to protect businesses from losses suffered when a business is disrupted by an order or action of a governmental agency for a covered event.
This covers business losses sustained during the period of time when access to the property is restricted by a covered event.
Virtually every business in the United States, large and small, has been damaged by the pandemic.
Specific industries that have been affected include:
Hospitality is one of the biggest industry sectors in the world. It physically connects businesses to each other and consumers to businesses. Shutdowns, quarantining, and consumer fears of COVID-19 have resulted in serious economic damage to this industry.
The COVID-19 pandemic hit manufacturers in an unprecedented way. Across the world, demand, supply and workforce availability were all impacted at essentially the same time. Many manufacturers that supply personal care or medical products have experienced disruptions in supply chains. Manufacturers in other sectors have experienced dramatic drops in demand and have had to reduce or cease operations.
As quarantined consumers turn to online shopping, brick and mortar businesses that are dependent on foot traffic have been suffering a massive slump. Flower shops, car dealerships, clothing stores, bookstores, jewelers, greenhouses, and sporting goods stores have all been forced to close their doors. This has resulted in tremendous financial losses to these businesses and in turn, losses of important local and state tax revenues.
As businesses across all industries shutdown, commercial tenants struggle to pay rent which impacts a landlord’s financial ability to make mortgage payments. While mortgage interest rates have seen all-time lows, stay-at-home orders have negatively impacted many real estate companies.
Unfortunately, despite insurance companies collecting more than $6 billion a month in premiums from small business for insurance coverage, they are now routinely denying these business claims – relying on the fact that most business will not challenge their denial.
Reviewing a business insurance policy can be a difficult and confusing task. A policy may be 100 pages or more and filled with unfamiliar terms, definitions, and explanations. Language and coverage vary policy to policy, company to company, and state to state. A detailed legal analysis is needed to evaluate a policy’s coverages and exclusions.
Our firm is currently reviewing insurance policies for small businesses to identify whether there may be any available coverage for COVID-19 related claims. If we find that a policy provides coverage, we can help gather the necessary documentation needed to substantiate and submit the claim.
If an insurance claim has already been made and it was denied, we can review the policy and the insurance company’s response to ensure the insurance company’s denial is not wrongful. If we find that a claim has been wrongfully denied, we can take appropriate legal action.
If you would like us to review a policy, or discuss a potential wrongful denial of a claim, contact our firm at: (419) 241-1395. There are absolutely no legal fees or expenses unless we recover from the insurance company for you.
Charles E. Boyk Law Offices, LLC