As people and businesses across the nation continue to struggle with the ramifications of the coronavirus (COVID-19) pandemic, restaurant owners are facing especially difficult economic challenges. While some restaurants pivoted to take-out and delivery service, most restaurants have suffered significant financial losses over the past few months. Restaurants are wondering whether their insurance carriers will cover their claims, and some owners have already filed claims over business interruption losses. For now, restaurants still face an uncertain future, so let’s explore how likely it would be for restaurant insurers to cover COVID-19 related claims.
Defining Business Interruption Insurance
Under more normal circumstances, business interruption insurance covers the net income loss and additional expenses stemming from damage to the insured’s property. For example, if there was a flood at a restaurant, the establishment would be unable to provide services to the community for a specific period of time, causing financial losses to the restaurant. Business interruption insurance would cover the income that the restaurant would have earned if it had not been flooded and remained open. Some restaurant owners are considering filing business interruption claims with their insurers, alleging that the financial losses they’ve experienced have been caused by a similar unforeseen disaster—the virus.
Civil Authority Coverage
Another option for some restaurant owners is to file a civil authority insurance claim. Civil authority coverage offers compensation to restaurant owners who have suffered a loss of income due to a government order or directive that prevents the public from accessing the restaurant. However, while many restaurants have already contacted their insurance companies to collect the coverage they believe they are owed, most insurance carriers have vocally expressed their intention of denying these claims.
An Uncertain Future
So far, many insurance companies have stated that there is no clear provision for a viral pandemic, and they may refuse to categorize it as a natural disaster like a fire, flood, or earthquake. In some cases, the language and exclusions remain vague enough for restaurant owners to move ahead with filing an insurance claim. Already, a few class action lawsuits have cropped up on behalf of restaurants whose insurance carriers have denied them coverage.
If you are a restaurant or small business owner and you’d like to learn more about your options for filing an insurance claim in Alabama during this unprecedented time, reach out to the knowledgeable insurance advocacy attorneys at Bevill & Bevill, LLC today at (205) 221-4646.