Business Interruption Insurance

Last week, news made the rounds that business interruption insurance will deny your claim for coverage of losses related to COVID-19. While it is true that most business interruption insurance policies specifically exclude coverage for losses related to viral contamination or pandemics, we’re being told that you should not assume that your claim for coverage will be denied. First, not all policies exclude viral pandemics. Further, these are unprecedented times and we are in uncharted waters – there are virtually no prior business interruption insurance cases which involve total or partial closing of restaurants due to a pandemic. The question as to whether or not coverage applies will likely be decided later by legislatures and courts in each state with varying decisions. Additionally, most policies require that the insured give prompt notice to the insurer and, to the extent such ‘prompt’ notice is not given, coverage may be subsequently denied if notice is given too late. There is virtually no downside in making a claim for business interruption insurance with the potential upside that (i) your claim gets approved or (ii) you have preserved your rights to potentially litigate coverage later.