Owning a business means more than attending to day-to-day operations, it means thinking about all those “what ifs?”. In Florida, what ifs include damage from hurricanes, lightning strikes, fires and any number of disasters that can affect your ability to keep your business up and running. Commercial general liability insurance, workers compensation insurance (required in Florida), business auto insurance and even business property insurance help cover you for most damages. But what if your business can’t operate for a longer period of time? That’s where business interruption insurance comes in. It’s intended to help you get through tough times while your business is shut down for unexpected reasons that are beyond your control.
What business interruption insurance can cover
Being out of business, even for a few weeks, costs money. While property and flood insurance may cover for damage to the property, it doesn’t help you pay your bills and expenses. A good business interruption policy helps by providing coverage for:
- Lost income and cash flow: What you would bring in if your business was in operation (often based on previous months’ financials) to help cover payroll and net lost income
- Loss of customers who take their business elsewhere: Even loyal customers may not be able to wait it out while your business gets back to normal
- Loss of use or rental value: Including commercial spaces or condominium/residential units
- Temporary lease of other commercial space: This generally includes the cost of moving equipment and setting up shop in a temporary location
Additional types of business interruption insurance
In addition to straightforward business interruption insurance, many business owners choose to increase protection for more significant coverage. This includes:
- Extended business interruption insurance: There may be times when your business property has been repaired or restored, but you need more time to return to your pre-loss level of income. An extended plan offers some additional coverage while your business gets back up to speed.
- Contingent business interruption insurance (or dependent properties coverage): When the supply chain breaks down because your vendor’s operation suffers damage, it impacts your business—both your ability to get necessary supplies and, therefore, to provide products or services to your customers. A contingent business interruption plan protects you from economic loss in the face of supply chain failures.
When to make business-interruption claims in Florida
Nobody wants to make a claim that is unnecessary or (in the eyes of your insurer) unjustifiable because it is not a covered peril. Legitimate business-interruption claims include:
- Physical damage to the business that is so extensive that it must halt operations: In Florida, this most often means damage from hurricanes. In order to get a settlement, you must be able to prove that (A) the businesses sustained damage to property; (B) that the property was covered under the policy; (C) the damage was caused by a covered peril, and; (D) that there was an interruption to business caused by the covered property damage.
- Physical damage to the property is a type of loss that is covered by the insurance policy, and the damage prevents customers and employees from being able to enter the premises. In other words, it has to be a covered peril.
- The government shuts down the business area due to a disaster: We are all familiar with emergency shutdowns caused by natural disasters (here again, mostly hurricanes in this part of the world).
While government shutdowns of businesses are typically covered, those stemming from COVID-19 brings us into uncharted territory. Expect insurers to oppose coverage and deny any claims filed in connection with this pandemic. Analyze your policy carefully to see how coverage is defined and watch for developments in the legislature. You will have many questions and may benefit from the help of an experienced business interruption Florida insurance attorney.
Protecting your business starts by learning more about your rights
These are difficult times for individuals, families and businesses alike. If you have questions or need help with a denied business interruption insurance claim, please call Johnson & Williams, P.A. at (407) 245-1268 or contact us online to schedule a consultation.