Brayton Purcell LLP has a team ready to handle your business interruption insurance claims.
The insurance industry should honor its commitments to cover COVID-19 business losses for restaurants, manufacturing, retail, and other business. You made contractual premium payments to your business insurance provider, you expected compensation during your time of need, and yet the insurance industry is aggressively denying these valid claims. Insurance litigation will likely be necessary to force the insurance companies to meet their contractual obligation for which they were paid by responsible business owners, perhaps unfortunately the only way.
Some possible coverages you may be entitled to may be property damage, business income, extra expense, civil authority, and dependent property.
On Tuesday, April 14th, 2020, the California Insurance Commissioner Ricardo Lara issued a notice requiring insurance companies and other California Department of Insurance licensees to comply with their obligations to investigate all claims caused by COVID-19.
The notice issued on Tuesday requires insurance companies and other licensees to:
- Comply with their contractual, statutory, regulatory, and other legal obligations with all California insurance claims, including business interruption insurance claims, event cancellation claims, and other related claims filed by California businesses.
- Acknowledge the notice of claim immediately.
- Provide the policyholder with the necessary forms, instructions, and reasonable assistance, including specifying the information the policyholder must provide in connection with the proof of claim and begin any necessary investigation of the claim.
- Accept or deny the claim, in whole or in part, immediately, but in no event more than 40 days after receipt of the proof of claim. The amount of the claim accepted or denied by the insurer must be clearly documented in the claim file unless the claim has been denied in its entirety.
Before you File a Claim
The initial notice to the insurance company and claim documents often form the basis for the insurance company’s denial of business interruption coverage. That is why it is critical that insured consult with a lawyer before filing a claim as the wording you choose can often mean the difference between compensation versus partial compensation only or outright denial. Most policies have specific time limits and form requirements to tender a loss claim. We will need to know this upfront to determine if insured has potentially hurt their claim by doing so.
Steps to File a Claim with your Insurance Company
The following steps can help maximize the possibility of getting fully compensated for your business’ loss to the extent your policy allows.
Step 1: Acquire and review your policies
The first and most important step is to get a copy of all your insurance policies. A significant distinction between policies is whether it’s a specified peril policy that insures for a specific type of instance, or an all risk policy. Examples of a specific peril policy include event cancellation insurance, contamination insurance, communicable disease coverage, and workers compensation coverage. Even aside from the broad distinction between a specified peril and an all risk policy, it is important to read the language of your policies because each policy can have different material language that can change the scope of coverage.
To get a copy of your policies, you can contact your insurer directly. Some insurers will allow you to access your policies directly from their websites. Other insurers require you to contact customer support at which point they might email you a copy of your policies or send the copies by physical mail. If you purchased your insurance through an agent or broker, you could contact that person because they will likely have access to your policies.
Step 2: Gather evidence of loss
The type of evidence you will need to gather depends on the type of coverage you have and what type of claim you are making. For example, if you are seeking coverage under a business interruption policy, then often you will need to gather evidence of what the business would have earned absent the interruption. This figure should include continuing normal operating expenses such as payroll. Such evidence can consist of past profit and loss statements or other documents illustrating a history of business income and profits from the sale of specific goods or services that are no longer able to be sold due to the disaster. If you are claiming any type of injury to property, then any evaluations of value, receipts for purchase of the property, sales agreements, and before and after pictures can be helpful. It is better to be over inclusive than under inclusive; gather as much evidence as you think might even potentially be useful in supporting your loss and you policy coverage.
Step 3: Let us contact your insurer
Often policies have contact information or specific ways that an insured can contact the insurer. You should have legal counsel reach out to the broker and insurer to notify of your loss and request information regarding what they require for making a claim. They will ask you to fill out intentionally confusing “proof of loss” forms and policy documents that are designed to give them a reason to deny your claim. Be aware, neither your broker nor insurer will likely be acting in your best interest. Let us be your advocates against confusion that insurance providers try to get out of paying you what you deserve.
Step 4: Let us handle your insurer’s investigation
Once your claim is submitted, your insurer will begin their investigation. This process can potentially include participating in a recorded interview under oath. It can also potentially include providing additional documentation that the insurer might request. Having trusted counsel advocating for you during this process will cut down on delays and potentially lead to a payment under your policies faster.
Step 5: Keep notes of all interactions with your insurer
Dealing with insurance companies can be frustrating. Information that they provide can differ from one representative who may not always document their work or do so accurately. For this reason, it is important that you document any interaction that you have with the insurance company including whether it be a phone interaction, email, letter or any other type of communication. If on a phone call, document the time, date, duration of call, number called, your number, the name of the representative, and details of what was discussed. Such documentation is helpful if you need to reference the communication in future discussions with the insurer or if you ultimately need to fight the insurer for improper delays or denials.
Just because you may have been told ‘no’ or that your policy excludes coronavirus-related losses, does NOT mean you do not have covered losses. We can review the specific language in your insurance policies in order to determine whether anything can be done.
While the type of coverage you have depends on the specific insurance policies you purchased, following these steps can provide the best possible chance of getting full payments under that coverage.
If any of your friends or loved ones have gone through a similar experience with their business and insurance policies, please have them contact Hugh Cook at (415) 493-3592 or [email protected] to learn more about how we can help.