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Business Interruption Lawyers

Business Interruption Lawsuit Update: TorHoerman Law Files Business Interruption Class Action Lawsuit in Madison County

May 8, 2020 - TorHoerman Law last Friday filed a business interruption class-action lawsuit against Society Insurance. The lawsuit, which was filed on behalf of Gem City Fresh Mex and Gem City Custard, alleges that the plaintiffs’ business interruption insurance claims related to COVID-19 shutdown orders were wrongfully denied by Society Insurance, the companies’ business insurance provider.

The business interruption class action lawsuit is filed in the Madison County Circuit Court.

Gem City Fresh Mex, which operates popular Mexican fast-food chain Qdoba, has restaurants across Central and Southern Illinois. Gem City Custard operates Culver restaurants across the state as well. Both corporations allege that their restaurants have suffered significant losses due to Illinois’ shutdown order.  They believe these losses should be considered a result of business interruptions.

Gem City Fresh Mex and Gem City Custard were both denied business interruption insurance coverage on the basis that, according to language within their agreement with Society Insurance, pandemic-related losses are excluded from BII coverage.

Society Insurance’s policy stipulation is no anomaly. Many businesses facing losses due to shutdown are currently dealing with similar denials – business owners left unaware of these exclusions due to the nature of the language in these business interruption policies. Society Insurance’s policy, like many other BII policies, only includes coverage for what the provider deems as ‘physical loss’ resulting from business interruption. According to the language buried in these policies, pandemics cannot be considered a physical loss and there is no express exclusion included on the front end of their policies.

"Instead, Society Insurance waited until after it collected Plaintiffs' premiums, and after a pandemic and the resulting closure, orders caused catastrophic business losses to Plaintiffs, to try to limit its exposure on the back-end through its erroneous assertion that the presence of the coronavirus is not 'physical loss' and therefore is not a covered cause of loss under its policies," the complaint states.

"The fact that the insurance industry has created specific exclusions for pandemic-related losses under similar commercial property policies undermines Society Insurance's assertion that the presence of a virus, like the coronavirus, does not cause 'physical loss or damage' to property. Indeed, if a virus could never result in a 'physical loss' to property, there would be no need for such an exclusion."

The lawsuit seeks compensation for unpaid business income and extra expenses with statutory interest.

At this time, Gem City Fresh Mex and Gem City Custard are unsure what their total losses look like. Illinois’ closure, which has been in effect since March 17, is extended until the end of May. Although it is likely that the order could be extended based on the timeline of Gov. JB Pritzker’s recently released “5 Phase Plan to Restore Illinois”.

TorHoerman Law, Wright & Schulte in Vandalia, Ohio, Hilliard Martinez Gonzales in Corpus Christi, Texas and Urban & Taylor in Milwaukee, Wisc represents the plaintiffs of this business interruption class-action lawsuit.

If you are a business owner who has been denied business interruption coverage related to COVID-19, you may be eligible to participate in the business interruption lawsuit. Contact TorHoerman Law today for a free, no-obligation consultation with a business interruption lawyer.

Read More Updates

Are you a business owner whose business has suffered financial hardship due to current events and unforeseen circumstances? Are you having issues with your business interruption insurance? Maybe you aren’t sure whether business interruption coverage is included in your business’s insurance policy. Whether you need help reviewing your insurance policy, filing a claim, or representation in the form of business interruption claim denial assistance, TorHoerman Law has a team of business interruption lawyers available to help you. Contact us today or submit your information for an instant business interruption case evaluation.

 

Business Interruption Insurance Claim Denial Assistance From Business Interruption Lawyers at TorHoerman Law

Many business owners pay into business interruption insurance, sometimes without knowing. Business interruption insurance (BII) protects businesses whose operations are stopped because of a covered peril. Covered peril differs policy to policy, but it typically includes disasters and catastrophes such as fires, floods, theft, falling objects, vandalism, and other unexpected emergencies. BII is not sold as an individual plan, and it is typically included in a commercial property insurance policy or as an add-on to a comprehensive policy package.

When covered emergencies happen, business interruption insurance is supposed to pay for a business’s lost profits, employee wages, operation costs, relocation, and other expenses. While BII is supposed to cover businesses during emergencies, business owners sometimes find that insurance companies unfairly deny their claims. If a disaster forced your business’ closure and you received a business interruption claim denial, contact a business interruption lawyer from TorHoerman Law to learn more about your legal options.

 

What is Business Interruption Insurance?

Business Interruption Insurance (BII) is insurance that covers a business’s lost income and other costs following a disaster or emergency. BII is not purchased as an individual policy, but instead included in a comprehensive policy package or added on an existing property/casualty policy. Business interruption coverage lasts until the end of what the insurance company defines as the “end of business interruption period.” This period typically lasts until the damaged property is repaired and back in the state it was before the disaster.

 

What Is Covered By Business Interruption Insurance?

Most business interruption plans cover more than lost income. BII typically covers the following business costs:

 

Profits

BII policies reimburse the profits a business would have earned had the event/disaster not happened. Profit reimbursements are usually based on the business’ earnings the prior month.

 

Staff / Employee Wages

BII plans can help business owners pay their staffs’ wages if it’s deemed essential to avoid losing employees while the business is shut down.

 

Taxes

Businesses are often required to continue paying taxes, even when they are not operating. BII coverage helps ensure businesses can pay their taxes on time to avoid fines and penalties.

 

Fixed Costs

Fixed costs include operating expenses, supplies, and other incurred business costs.

 

Loan Payments

Even when a disaster halts a business’s operation, it is still required to make payments on loans. BII coverage often includes help with loans.

 

Training Costs and Commission

Many emergencies/disasters force businesses to utilize new programs, machinery and sometimes hired staff. Many BII plans cover the costs of new equipment and training costs.

 

Temporary location / relocation

Some BII policies will cover the costs of moving to a new or temporary location for the business.

 

Additional Expenses

BII typically covers additional expenses (within reason) that are necessary for a business to keep operating/start operating again. These are expenses beyond fixed costs such as new supplies, marketing materials, furnishings, etc.

 

How is Business Interruption Insurance Calculated?

Business Interruption Insurance payments are usually based on a business’ past financial records. BII typically has a coverage limit, the maximum amount that insurance will pay towards a covered claim. Financial losses beyond the coverage limit are the business owner’s responsibility, so it’s important to choose a coverage limit appropriate for your business. When determining a coverage limit, consider the following:

  • After an emergency or disaster, how long would it take to have your business back up and running?
  • How protected are your building from disasters, break-ins, and other possible disturbances?
  • Are your businesses’ fire alarms, smoke detectors, and sprinkler systems operational and up-to-date?
  • Do you have comparable commercial spaces available in your area?

 

What is Business Interruption Risk?

Business interruption risk refers to scenarios that could force a business to temporarily halt operations. There is a diverse range of risk scenarios that can be physical, virtual, accidental, intentional (by malicious intent), internal, or from outside suppliers, customers, or providers. Whatever the risk, the financial loss that businesses face if they cannot operate can be severe. While business interruption insurance risk coverage differs from policy to policy, these are a few of the major contingent business interruption risks:

  • Equipment failure
  • Fires
  • Flooding and other water damage
  • Natural disasters
  • Loss of running water or electricity
  • Vandalism, break-ins, and other crime
  • Third-party disruption

 

Does my Business Insurance Policy Include Business Interruption Insurance?

Business interruption insurance is the only insurance policy that accounts for potential (and expected) earnings when evaluating damages. Businesses without BII who are forced to close due to emergencies/disasters often find themselves unable to pay loans, debts, and other costs. BII can’t be purchased individually and is typically sold as a part of a comprehensive business policy package. It’s crucial for business owners to understand their business insurance policy’s BII coverage.

 

How do I know if my Business Insurance Policy includes Business Interruption Insurance?

Review your business income insurance policy to ensure that business interruption insurance is included. If you do not readily have access to your policy, contact your insurance agent, broker, or company. If you believe that your previously purchased policy included BII and it is not being honored, contact a business interruption lawyer.

 

How do I File a Business Interruption Insurance Claim?

Filing a business interruption insurance claim might seem complicated, but it doesn’t have to be. If you need business interruption insurance claim assistance and want to ensure your insurance company honors your coverage, a business interruption lawyer can help you file your business interruption claim. TorHoerman Law has a team of business interruption lawyers available to assist in filing business interruption claims.

To file a business interruption claim:

  • Immediately contact your insurance company and agent.
  • If you were forced to closed due to malicious acts of another party, report any break-ins, theft, or vandalism to the police.
  • Read and review your business insurance policy. Your policy statement should describe your responsibilities.
  • After an emergency or disaster, take the necessary steps to mitigate damages, make temporary repairs on your property, and stop further damage from occurring. If you are required to shut down your business, do so right away.
  • Take photos and make detailed documentation of the damage to your property.
  • If immediate repairs are needed on your property or equipment, try to save damaged parts for the claims adjuster to examine.
  • Gather records of your business’ revenue before and after the emergency. Keep detailed records of the business’ operations, costs, and additional expenses during the interruption period.

Contact a legal expert at Tor Hoerman today to learn more about handling your business interruption insurance claim.

 

Business Interruption Insurance Claim Denial of Access

Business owners should expect their business interruption insurance to compensate for covered peril expenses lost due to emergencies or disaster. Business owners pay for coverage, and insurance companies should honor the coverage agreement. Unfortunately, this is not always the case. Sometimes, especially during national catastrophe causing a majority of businesses to close down, insurance providers will deny coverage payouts to insurees. If you face business interruption insurance claim denial, you should contact a business interruption lawyer right away.

 

What To Do If Your Business Interruption Claim is Denied

If your insurance company denied your business insurance interruption claim, that doesn’t mean you don’t deserve compensation. Some insurance companies are not honoring their business interruption insurance policies and wrongfully denying clients. If your business cannot operate because of a catastrophe, your BII should be there. If your business interruption insurance claim is wrongfully denied, contact the business interruption lawyers at TorHoerman today to discuss your potential case.

 

Business Interruption Claim Denial Lawsuit for Denied Coverage

Nationwide, small business owners are filing Business Interruption Claim Denial Lawsuits. The lawsuits challenge insurance companies who claim interruptions to business are not covered by business interruption insurance covered events. Many cases are claiming breach of contract and bad faith by insurance companies for not honoring coverage.

 

Filing a Business Interruption Claim Denial Lawsuit

Filing a business interruption claim denial lawsuit after an unjustly denied business interruption insurance claim can have a vast impact. It gives you the chance to receive the compensation you deserve, and it makes it more likely that insurance companies will honor future business’ claims. To file a business interruption claim denial lawsuit:

  • Take the steps necessary to mitigate damages to your business. Make temporary repairs on your property, and stop further physical damage from occurring. This will help strengthen your case.
  • Keep Detailed Records and Documentation. Include photos of the damage, copies of your medical records and bills, insurance company correspondence, and details of everyone you spoke to in person and on the phone including names, titles, dates, and names.
  • Keep records of your business’ revenue before and after the disaster. Keep notes of business’ operations, costs, and extra expenses during the interruption period.
  • Reach out to a business interruption lawyer. The attorneys at Tor Hoerman law will help you file your lawsuit and make the best case possible.

 

Business Interruption Insurance Policy Breach of Contract

Business interruption insurance denial lawsuits often claim that there was a breach of contract. Depending on policy agreements, breach of contract entails cases where insurance agents fail to make payouts they are legally obligated to make. By signing up for a business insurance policy, the insurer and business owner sign a legally binding contract that obligates both to fulfill their end of the contract; this means the business owner pays premiums and the insurer makes payments on credible claims. By failing to make payments, the insurance company is breaching the contract established by both parties.

 

Business Interruption Insurance Policy Bad Faith Claim

Another common business interruption insurance lawsuit claim is a claim of bad faith action on behalf of the insurance provider. Bad faith claims are made when an insurance company fails to uphold its end of a policy payment agreement, often with claims that an event is not qualified for coverage (for example, they can argue discrepancies in what is categorized as a “disaster.”) The argument in these cases is that the company never intended to honor the agreement and is acting in bad faith. These cases often invoke debate over legal semantics, and it is especially important to have an experienced business interruption lawyer working for you.

 

Business Interruption Claim Denial Damages

Business interruption insurance claims denial damages cover any reimbursement a business should have received through their business interruption insurance. Your business interruption lawyer may also demand compensation for any financial damages that the business suffered as a result of the withheld coverage.

In a business interruption claim denial lawsuit, the business interruption lawyers’ fees are added to the overall payout, so that they do not come out of the business owner’s pocket.

 

Evidence for a Business Interruption Claim Denial Lawsuit

To file a business interruption insurance denied claim lawsuit, you need to have proper evidence. Before reaching out to a business interruption lawyer, make sure you have documentation and proof that:

  • You are the licensed business owner
  • You have proper insurance coverage (with included BII)
  • You filed a timely claim
  • The insurance company denied your claim

 

Compensation for Business Interruption Claim Denial Lawsuit

Compensation depends on the specific policy, but it typically includes lost income, profits, staff and employee wages, taxes, fixed costs, and loan payments.

 

Hiring a Business Interruption Lawyer

Unfortunately, not every business interruption insurance claim results in fair compensation for lost revenue. If your insurance company denied your business interruption insurance claim, it does not mean you don’t deserve compensation. After paying for coverage, you deserve the services you paid for.

If you were denied compensation, or if you were unhappy with how your BII claim was handled, contact TorHoerman Law’s team of business insurance interruption lawyers today.  Our law firm offers free, zero-obligation case consultations for all potential clients. Our fees are additionally added to any compensation that a business owner receives so that the business owner does not face any financial loss, even from financial gain acquired through their business interruption claim denial lawsuit.

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Litigation Updates

COVID-19 Crisis Leaves Small Businesses Struggling, Lawsuits Filed Against Insurers Denying Coverage

April 15, 2020 - Companies of all sizes are struggling to remain operational, either now as essential businesses or following the current national lockdown. The coronavirus epidemic has affected nearly all aspects of American culture, and the economy is no exception. Many businesses are stuck responding to unstable economic conditions while often working remotely. Small businesses have been hit so hard that a number of business owners are now suing insurance companies over failing to cover the losses they’ve incurred from the pandemic.

Most states have shut down all non-essential businesses, forcing thousands into unemployment and seeking government aid. A $2 trillion relief package passed by the federal government will give $1,200 to eligible single Americans and $2,400 to eligible married Americans.

The relief package isn’t enough for small businesses, some business owners claim. Small businesses usually operate with an insurance plan for business-interruption which may or may not include disasters on this scale. As a consequence, some insurance companies are denying responsibility during the crisis. At least a dozen business interruptions lawsuits against insurance companies have been filed in response to the discrepancy.

Barbara Snowden, a small business owner out of Texas, has recently gained attention for being denied coverage. She runs a wig store that supplies wigs to chemotherapy patients and was promptly rejected by her insurance company when sales plummeted. Since then, she’s had to focus on selling her products online with little success.

With current work-limiting policies in play, the American Property Casualty Insurance Association estimates that American small businesses could lose upwards of $400 billion dollars a month. They predict the COVID-19 crisis to have a bigger impact on the insurance industry than the terrorist attacks of 9/11.

Insurers claim the backlash is unfounded since the contracts they have with small businesses specifically exclude pandemics like this. Instead, insurance policies are intended to cover things like fires or other physical catastrophes. A payout that spans numerous companies in such a short time would theoretically drain the insurance company, creating an entirely new crisis.

However, it isn’t certain how or if insurers will be held responsible. A lawyer representing Oceana Grill argues that coronavirus could be compared to a bug infestation that damages physical surfaces and has caused the shutdowns, meaning it should be included in the company’s insurance contract. Civil authority coverage is also meant to reimburse companies whose property is closed by the government. The case is ongoing.

Multiple states have already begun fighting for struggling companies. A bill proposed in New Jersey would give small companies (100 or fewer employees) business-interruption checks. A similar bill proposed in Massachusetts would even negate the virus-exclusion clauses being touted by insurers. Other states working to pass a business-interruption bill include Pennsylvania, New York, Ohio, Louisiana, and South Carolina.

Another notable business-interruption lawsuit in progress is from the Chickasaw Nation, who filed suit in late March after having to shut down their Oklahoma casinos. It isn’t clear what their insurance plan covers. The Native American casino industry has requested $18 billion in damages from the government so far.

In addition to the businesses mentioned, a movie theater, scuba-diving company, and several other restaurants have filed business interruption lawsuits against their insurers. The outcome will be unique for each lawsuit because insurance laws vary by state. Analysts expect many more companies to follow in the footsteps of Oceana Grill if the pandemic persists.

If you have a business that has been affected by the COVID-19 pandemic, you should immediately attempt to file a COVID-19 business interruption claim. If you face a business interruption claim denial, contact a business interruption lawyer to discuss your legal options, including file a COVID-19 business interruption lawsuit against your business's insurance provider.

References

Barlyn, Suzanne. “Casino Gambles on Coronavirus Business Interruption Lawsuit Against Lloyd's, AIG, XL.” Insurance Journal, 25 Mar. 2020, www.insurancejournal.com/news/national/2020/03/24/562277.htm.

Blosfield, Elizabeth. “Despite Insurance Industry Concerns, More States Introduce COVID-19 BI Bills.” Insurance Journal, 15 Apr. 2020, www.insurancejournal.com/news/east/2020/04/15/564920.htm.

Business Interruption for Denial of Access to Insured Property. International Risk Management Institute, Inc., www.irmi.com/articles/expert-commentary/business-interruption-for-denial-of-access-to-insured-property.

“Business Interruption Insurance Trends: Allianz.” AGCS Global, www.agcs.allianz.com/solutions/business-interruption.html.
Kagan, Julia. “Business Interruption Insurance.” Investopedia, Investopedia, 13 Apr. 2020, www.investopedia.com/terms/b/business-interruption-insurance.asp.

Feeley, Jef, and Katherine Chiglinsky. “Litigation Builds Against Insurers Over Coronavirus Business Interruption.” Insurance Journal, 8 Apr. 2020, www.insurancejournal.com/news/national/2020/04/08/563723.htm.

Keith. “Illinois Lawsuits Challenge Society Insurance's Coronavirus Claim Denials.” Insurance Journal, 3 Apr. 2020, www.insurancejournal.com/news/midwest/2020/04/03/563177.htm.

Sams, Jim. “Trump Tells Insurers to Pay Virus Claims If Pandemics Not Excluded.” Insurance Journal, 14 Apr. 2020, www.insurancejournal.com/news/national/2020/04/14/564744.htm.

“What Is Business Interruption Insurance?” Allstate, Nov. 2019, www.allstate.com/tr/business-insurance/business-interruption-coverage.aspx.

Last Modified: May 8th, 2020 @ 03:57 pm