Over the past several months, many business owners have learned that business interruption coverage is not always as helpful as they might wish. Specifically, there have been a lot of legal maneuverings related to business interruption claims in the wake of COVID-19. Often, these cases have been resolved unfavorably for business owners.
The good news is that, in the case of Texas’ winter storms, many business owners will find their business interruption coverage a bit more helpful. If you have had to shut down your normal operations as a result of the inclement weather or damage to your premises, it is worth taking a closer look at your BI policy, and perhaps even speaking with a Texas insurance attorney.
WHAT IS BUSINESS INTERRUPTION INSURANCE?
First, a quick reminder as to what BI coverage actually entails.
Essentially, a business interruption policy will help supplement your company’s income should you find yourself unable to operate as normal. Naturally, there are certain types of “interruptions” that are included in any given policy, and it is important to review your specific coverage before filing a claim.
WHAT IS AND ISN’T COVERED UNDER BUSINESS INTERRUPTION INSURANCE?
Generally speaking, most business interruption policies will cover your business if you have to close your doors or suspend normal activities due to physical damage to the building. For example, if you have to close your retail store to make repairs following a tree falling through the roof, or a frozen pipe bursting, that will likely be covered by your business interruption policy. This will come as welcome news to many Texas business owners who are dealing with the aftermath of frozen pipes following the severe winter storms.
A more complicated issue is power outage. Some business interruption policies do not cover off-site utility outages. Although business owners may have separate riders or provisions to offer extra protection.
Also note that, even if you do have interruption related coverage, this coverage often has a time clause. For example, your coverage may not kick in unless you are without power for 72 hours.
LOOKING CLOSELY AT YOUR COVERAGE
The bottom line? Following the winter storms, some business owners may be able to make a claim based on their business interruption coverage, potentially recouping some of the losses they endured during the inclement weather.
Not all business owners will be eligible to make a claim, so it is important to review the specific language of your policy. Most often, business owners who are eligible to make a claim will be those who fall into one of these two categories:
- Those who experienced physical damage to their property, such as ruptured pipes.
- Those who have additional endorsements for off-site power outages, and who experienced a sustained interruption to their utilities.
If you have any specific questions about your business interruption coverage or wish for one of our attorneys to take a closer look at the language of your policy, we’re here for you. Reach out to the team at McLaurin Law any time.
Jason McLaurin is a founding member of McLaurin Law. He has over a decade of experience representing clients at trial, arbitration, and mediation in matters concerning insurance policyholder recovery disputes, complex commercial litigation, and catastrophic personal injury claims. He also represents businesses as outside general counsel for clients in a variety of industries including construction, oil and gas, maritime, technology, and professional services. He is licensed and handles matters in both Texas and Louisiana.