Business Interruption Claims Explained

If your business has had to stop trading due to factors that are outside of your control, you may be able to make a business interruption claim.

However, business interruption claims are often the most contentious area of a business insurance policy, and you might find that your insurer intends to pay out less than you had anticipated, or denies your claim altogether.

If so, you should speak to an insurance lawyer at the earliest opportunity.

Business interruptions

Sometimes situations occur that unexpectedly disrupt a business’s ability to carry out its day-to-day activities.
This might include –

  • Natural disasters, such as floods and wildfire
  • Extended power outages
  • Access to your premises is denied for safety reasons – for example, a neighbouring business has had a chemical leak
  • Access to your premises is denied for other reasons – for example, construction work

Whatever the reason, if your business has had to cease trading unexpectedly, it will undoubtedly be a difficult time. Not only will you lose money, you may also lose key employees, clients, customers, suppliers and contracts.

Furthermore, your competitors may gain an advantage over you while you are not operating. This can make it even harder to recover when you do eventually reopen your doors.

Business interruption insurance

For a business owner, having to suddenly stop trading will be an extremely scary situation. Nevertheless, if you have business interruption coverage as part of your business insurance policy, then you may be able to recover your losses.

Depending on the type of policy you have, this insurance may cover your continuing expenses, or replace the profit you have lost. For instance, you might have a –

  • Gross earnings policy, which pays out until the property or stock is repaired or replaced
  • Profits forms policy, which pays out until a business gets back to its normal operations
  • Extra expense policy, which pays out for costs that are incurred, even though a business is able to continue operating during the period of restoration

Making a business interruption claim

But the thing about making an insurance claim, whether it is a business interruption claim or otherwise, is that it all depends on the wording of your policy. Even if you opted to get business interruption coverage, your insurer may deny your claim based upon the terms of the contract.

Alternatively, your insurer may calculate the value of your claim to be lower than you anticipated. This is not uncommon in business interruption claims, as it will be necessary to project your lost revenue and other costs. Your insurer will analyze these losses and will calculate a pay out depending on their findings. This may not tally with the extent of coverage you had hoped for.

Speak to a solicitor

If you are encountering difficulties while making a business interruption claim, you can always seek advice from an insurance lawyer. An insurance lawyer can review the wording of your policy and advise whether or not you are entitled to make a business interruption claim.

An insurance lawyer can also pursue the claim on your behalf, calculating your losses and putting forward a detailed analysis that will help prove your case.

If you would like help making a business interruption claim, please do not hesitate to contact us at North Shore Law LLP.

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