The ongoing COVID-19 pandemic has caused significant problems for many businesses. Some business owners have ceased operations completely. Luckily, there is a solution that should be explored before it’s too late. Here is a look at how business interruption insurance can protect you from losing your business during COVID-19.
Does Business Interruption Insurance Cover Losses Caused by COVID-19?
Business interruption insurance helps protect your business against any financial losses sustained due to the COVID-19 pandemic. The policy is designed to protect your business from suffering a total loss of income when you are unable to operate your business. It’s important to check the terms of your policy to make sure that pandemic-related losses are covered. In order to help business owners, many states have created pandemic-based legislation to cover significant losses.
What’s Covered under Business Interruption Insurance?
Business interruption insurance policies can help your business during emergencies. You will receive supplemental income to help cover your daily operating expenses and your overhead until your business is able to operate as usual. These policies primarily help small businesses. Research shows that many small businesses are unprepared for a significant loss of revenue during emergencies. Your business insurance interruption policy should also contain property and liability coverage. Property coverage protects you against potential losses that may occur due to damage to your property or inventory. Liability coverage protects you if someone files a claim against your business.
Generally, your business is covered if it suffers property damage due to a fire, theft, or a natural disaster such as severe weather, but you should also check to make sure that your business is covered if your building is damaged or vandalized while the business is out of operation. Also, be aware that any damage due to flooding may not be covered unless you amend your policy, as flood protection is not usually included in basic policies.
How Has the Pandemic Impacted Businesses?
The ongoing coronavirus pandemic has damaged the economy and negatively impacted thousands of business owners. Over 100,000 businesses have ceased operations since the start of the pandemic. More than half of those businesses announced that they were shutting down permanently. Make sure that your business interruption policy includes coverage for pandemics. If you don’t amend your policy, any loss of income that you experience due to the pandemic will not be covered. If your policy doesn’t have clearly defined language, a judge may have to decide if your pandemic losses are covered. There have been a few cases filed regarding the status of business interruption coverage related to the pandemic. Some businesses were able to cover their losses, while other rulings were awarded to the insurers. The inconsistent rulings have caused governments to pursue legislative action. Many insurers are now being asked to cover any business interruption losses caused by the pandemic.
Managing Business Losses Caused by COVID-19
If your business has been affected by the coronavirus pandemic, check your existing business insurance policy to see if pandemic relief is included in your coverage. You can reach out to your insurer for more clarification. If you are able to file a claim, you’ll likely be asked to provide documents and give detailed information regarding the financial losses your business has suffered during the pandemic. If necessary, you may have to consult with your lawyer.
Consider other alternatives to continue operating your business. You’ll still have to abide by all of the social distancing and safety requirements. Look at your business budget to find ways to reduce expenses and operating costs. Research all of the latest legislation designed to assist businesses struggling with the impact of COVID-19. Do not overlook financing options. Your business may qualify for a government-backed loan program that protects you until the pandemic ends.
The COVID-19 pandemic has taken a toll on everyone. Business interruption coverage can help you protect your assets. Even if the coverage isn’t beneficial at the moment, it is a valuable safety net to have if something happens in the future. If you have more questions, the professionals at McCarty Insurance are here to assist you. We will help you find the right policy for your business.
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