Business Interruption

Business Interruption

Business interruption insurance may cover loss of business income in case of a covered peril. Business interruption coverage may become essential when the business is out of service. A business that has closed down entirely while the repairs are in progress, may lose most of its clients to competitors. A business interruption claim may be triggered by closure of business due to disaster related events, or due to the rebuilding process after a sudden or accidental event that caused that business to stop operating.

Some policies may include Civil Authority Coverage. Civil Authority coverage, also known as Public Authority Coverage, is a provision in the policy that outlines how the loss of business income or business interruption may apply when a governmental entity denies access to the insured property or business. You may contact our office for a free consultation and evaluation of your policy business interruption or loss of business income under Civil Authority Coverage regarding COVID – 19 (coronavirus) pandemic related mandatory shutdowns by authorities.

The business interruption insurance is different than business property insurance. Business interruption insurance covers the loss of income and business property insurance covers damaged property (in the event of a covered loss).

In order for business interruption insurance claim to be properly processed, detailed prior business financial records may be needed. It is important for the business owner to have proper prior accounting documentation. The insurance company may require the prior accounting records including the prior tax filings to properly establish the business income loss. The business interruption coverage is generally sold with BOP policies (Business Owner Policies) as part of a package. However, this coverage may also be purchased or adjusted by the business owner depending on their needs. There is generally 48 hours waiting period after the disaster until business interruption coverage starts.

If the insured or the insurance company do not agree on the business interruption loss amount, an appraisal clause may be invoked under the policy terms and conditions.

“Most standard policies contain an appraisal provision, which can be helpful in the event that you do not agree with your company on the amount of loss. Read your policy to see if it contains one. Under this provision, either of you can demand an appraisal. Each party selects a competent appraiser. The appraisers then select an umpire. If the appraisers cannot agree on the amount of loss, their differences are submitted to the umpire. An amount that any two agree upon is binding. Each party pays its appraiser; the umpire fee is shared.” Source:

A public adjuster may assist the policyholder in dealing with their insurance company and any other parties who are involved in the claims process and the repairs.

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