Over the past few months, businesses across the US have been devastated by the COVID-19 pandemic. While mandatory stay-at-home orders and social distancing practices appear to help mitigate the spread of the virus, many business owners are left wondering how to curb the subsequent financial impact, or even survive for that matter, as the fallout of a crippled US economy continues to grow.

Many businesses are exploring all available options to make it through the coming months. In addition to payroll tax credits, the Paycheck Protection Program and other emergency lending provided by the federal government under the Coronavirus Aid, Relief and Economic Security (CARES) Act, some businesses have sought relief by filing coronavirus-related business interruption claims with their insurer.

What is business interruption insurance?

Business interruption insurance is coverage that replaces lost income in the event of an interruption to the business, such as a natural disaster or fire. When an insured business suffers from an interruption, it may be entitled to insurance benefits that pay for the actual loss of business income during the period of restoration. Business interruption insurance can cover lost revenue, rent or lease payments, employee wages, taxes and loan payments.

Claim denials and bad faith

Unfortunately, many business interruption policies exclude coverage for income lost due to communicable diseases – a change made by some insurers after the SARS outbreak in 2003. After paying insurance premiums for years and years, it can be incredibly frustrating to need relief and have your claim denied. Whether your policy excludes losses or not, some claims may be denied by insurers without proper justification. When this occurs, it is known in the legal world as “insurance bad faith.”

The language of bad faith claims comes from the insurance companies’ duty, as stated in most state laws, to act in “good faith and fair dealing.” When insurance companies deny claims, reinterpret their policies to unlawfully suit themselves, or delay claims, the insurance company is acting in bad faith. While not every claim denied is in bad faith, those that fall into the category of insurance bad faith can be legally appealed to recover the amount the claimant is rightfully owed. There is a long list of actions that an insurance company can take that can be insurance bad faith, here are a few of the most common ways they occur:

- Denial of a claim without enough basis to do so

- Lack of timely investigation and resolution of a claim

- Lowballing clients to settle a claim for less than the amount due

- Requiring excessive proof of loss that is not needed to process a claim

- Failure to provide a reasonable explanation when a claim is denied

- Telling an insured not to hire a lawyer

- Using outsourced parties such as private investigators or claims adjusters to deny or reduce a claim

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With the volume of claims filed in the wake of the coronavirus outbreak, insurance companies may be looking for any reason to deny, delay or lowball claims. These acts of bad faith can be a matter of life or death for some businesses that desperately need such insurance benefits. We care deeply about these businesses, as they are the heartbeat of our economy.

We’re here to help

If you think your insurer may be acting in bad faith regarding a business interruption claim, you may be entitled to compensation without ever going to court. Fill out the short intake form on this page today for a free and no-obligation review of your case. We work with firms across the country to help assess the unique facts and circumstances of your claim, navigate claim-handling procedures, and explore any potential litigation claims that may be raised against your insurer so that your business can make it through this unprecedented time of uncertainty. We don’t receive any compensation unless you do.

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