As Texans know, natural disasters like the tornado we experienced on January 24, 2023, hurricanes, and other unanticipated events can significantly impact Texas business owners. After suffering a devastating event, business owners may not know where to turn for help, or how to submit a business interruption claim to their insurance company. Are you a business owner in the Houston area struggling to recover from an interrupting event? You may be eligible for financial compensation from your insurance company and should be prepared for navigating a business interruption insurance claim process.
Although the claim process can feel intimidating, understanding what is involved and gathering information in advance can help ease your burden during this challenging time. Business interruption insurance can provide coverage for losses suffered due to interruption of your business’ normal operations due to natural disasters, property damage, logistical problems, or other events resulting in interruption of ordinary business operations. However, filing a business interruption claim can be complicated, and it’s common for insurance companies to deny or underpay these claims. Knowing how the process works is essential to prepare your claim correctly and maximize your chances of recovery.
At McLaurin Law, PLLC, we help Houston business owners with all aspects of business interruption insurance. In this article, business interruption attorney Jason C. McLaurin, our law firm’s founder, explains the business interruption claim process in Texas. Do you need help with your business interruption claim? Call us at (713) 461-6500 to schedule a free strategy session.
Types of Business Interruption Claims
Business interruption policies vary. Depending on your coverage, the following types of claims may be available to you:
- Property damage claims. All business interruption policies cover losses resulting from property damage that affects the structure of the building. Covered causes typically include natural disasters like floods, hurricanes, and earthquakes. Some policies also cover damage from fires, accidents, and vandalism.
- Civil authority claims. This type of coverage includes losses due to a state, local, or federal government entity prohibiting access to your business premises.
- Contingent business interruption claims. Contingent coverage can compensate you for lost revenue caused by a third-party shutdown.
- Supply chain disruption claims. An extended business interruption policy may cover extra expenses and losses due to logistical issues such as supply chain disruptions.
Factors That Affect Business Interruption Claims
The type and amount of compensation you may be entitled to under your insurance policy will depend on several factors.
First, you need to look at the terms of your insurance policy. Understanding its terminology and the methodology for calculating losses will give you a better idea of your applicable coverage.
As you review your policy, keep in mind that the language is often vague. Your insurance company may even use definitions of terms like “profit” or “income” that do not correspond with standard accounting definitions for these same terms.
Other factors that impact business interruption coverage include:
- The extent of the damage
- Your business and its revenue model
- The duration of the interruption
The duration of the interruption is critical in basic business interruption policies because they typically only cover losses incurred until you have repaired and/or replaced damaged property.
The Business Interruption Claim Process
The business interruption claim process may vary depending on your insurance carrier, but, generally, it starts with filing a claim. Your insurer will then investigate, or assign another company to investigate, the facts of your claim by assigning individual adjusters and claim representatives to evaluate the damage to your property and/or business and make a determination regarding the amount of your business interruption losses covered under your policy.
If the insurance company denies your claim, you may be able to pursue an appeal through alternative dispute resolution methods like mediation and arbitration, or litigation.
Because this process can be complicated and the insurance company and assigned individual adjusters often unreasonably draw out this process, you should hire a Houston insurance lawyer to assist you with the process and to help ensure that your claim is promptly and fairly investigated and handled and that you receive a full and fair payment on your claim of all insurance proceeds you are rightfully entitled to under your insurance policy.
Common Issues in Business Interruption Claims
Business interruption policies typically include exclusions to coverage based on the type of event or peril resulting in interruption of your business operations, as well as the type of property damage to which business interruption coverage applies. If your policy does not include coverage for fire damage, you won’t be able to file a claim to cover business interruption losses after a fire.
Even if your policy covers the type of damage you incurred, you may run into disagreements with the insurance company that delay resolution of your claim or result in the insurance company wrongfully undervaluing and underpaying or denying your claim:
- Disagreements over the extent or scope of the loss
- Disputes over the cause of the loss
- Disputes over the amount of the loss
Why Hire a Business Interruption Attorney?
You shouldn’t go through the business interruption claim process on your own. A business interruption attorney can provide you with invaluable, professional experience, advice, and guidance, including:
- Reviewing your business interruption policy to determine the extent of your coverage
- Determining whether you have a valid claim
- Thoroughly examining and documenting all physical, property damage
- Assembling a forensic team of legal, insurance, accounting, and construction experts to evaluate and provide reports demonstrating the true cost to repair and/or replace damaged property
- Preparing and filing your claim and submitting required documentation in support of your claim
- Assisting you with the appraisal process, if applicable
- Communicating with the insurance company and assigned adjusters
- Advocating for your rights and interests as a Texas policyholder
- Helping you to reach a fair and fair resolution of any dispute regarding the value or amount of your claim
- Filing and pursuing an appeal of a wrongfully denied business interruption claim
- Representing you in court, if necessary
Crucially, an attorney can take care of all aspects of your claim, freeing you to focus on rebuilding your business in this challenging time.
When You Need More Than Luck, Contact McLaurin Law, PLLC, for Help with Your Business Interruption Claim
The business interruption claim process can be significantly more complex than the claim process for a standard, property damage claim. Knowing what this process entails and how best to navigate the process and communicate with your insurance company is vital to protecting your business.
An experienced business interruption lawyer from our team at McLaurin Law, PLLC, can help you understand the extent of your coverage and support you as you file your claim and pursue compensation. Call us at (713) 461-6500 or complete our online form to schedule a consultation with an experienced Houston insurance lawyer.
McLaurin Law: when you need more than luck on your side.