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The Secret Insurance All Businesses Should Have

February 13, 2024 Insurance Industry Legal Blog

Reading Time: 6 minutes

Business Interruption Insurance

Owning a business has many perks but can also be very unpredictable. A common trait many successful business owners share is the ability to plan for the future. Business interruption insurance is one tool in the tool chest that can help business owners protect themselves from unforeseen circumstances that they could not have predicted and provide financial stability in the midst of uncertainty.

Interruption Insurance Definition and Coverage

Business interruption insurance is a type of insurance coverage that helps protect businesses from financial losses faced when their operations are interrupted or halted due to unforeseen events. It typically covers loss of income, ongoing expenses, and additional costs incurred during the period of interruption. The situations that may trigger a business interruption claim can include natural disasters like fires or floods, vandalism, equipment breakdowns, supply chain interruptions, or even government-mandated closures. The coverage can help businesses recover lost income, pay rent, employee salaries, loan payments, and other fixed expenses while they are unable to operate.

It’s important to note that the specific coverage and policy terms can vary depending on the insurance provider and the policy itself. There can be exclusions or limitations in business interruption insurance policies that businesses should be aware of. Here are some common exclusions or limitations to consider:

    1. Waiting period: Most business interruption policies have a waiting period, which is the period of time that must elapse after the covered incident before coverage begins. This waiting period can range from a few hours to several days, so it’s important to understand how long you may need to wait before receiving benefits.
    2. Policy limits: There are typically limits on the amount of coverage provided by a business interruption policy. It’s important to assess your business’s potential losses and ensure that the policy’s limits are sufficient to cover those losses.
    3. Excluded perils: Some policies may exclude certain perils or events from coverage, such as acts of war, nuclear incidents, or certain types of natural disasters. Make sure to review the policy carefully to understand which perils are covered and which are excluded.
    4. Proximity requirements: Some policies may require that the covered incident occur within a certain proximity to the insured property. For example, if your business is located in an area prone to hurricanes, the policy may only provide coverage if the hurricane makes landfall within a specified distance from your location.
    5. Proof of loss: Insurance companies may require documented proof of the loss and may request financial records to support your claim. It’s important to keep accurate records of your business’s income, expenses, and any other relevant documentation to substantiate your claim.

These are just a few examples, and it’s essential to carefully review the terms, conditions, and exclusions of any business interruption insurance policy you are considering.

Recovering Business Interruption Losses

Recovering under business interruption insurance can be a long and difficult process, but knowing the steps and being prepared with the proper documentation can help to speed up the process and reduce the chances of your claim being denied. First and foremost, contact your insurance provider as soon as the business interruption occurs. They should guide you through the claims process and provide you with necessary forms and documentation requirements.

Collect all relevant documents that support your claim, such as financial statements, profit and loss statements, tax records, and any other evidence of the impact on your business operations. It’s important to be thorough and provide accurate information to support your claim. In doing so, carefully review your insurance policy to understand the coverage limits, waiting period, and any exclusions or limitations. This will help you understand what expenses and losses are eligible for reimbursement and what documentation is crucial to recovering these expenses and losses.

Engage an insurance adjuster. Your insurance provider might send an adjuster to assess the extent of the business interruption and evaluate the financial losses incurred, however, you may want to engage your own adjuster as well to ensure your claim is being evaluated fairly. The adjusters will conduct a detailed investigation, review your documentation, and determine the amount you are eligible to claim.

Finally, submit and negotiate your claim. Make sure you thoroughly complete the necessary claim forms provided by your insurance company and attach all supporting documentation. Be mindful to submit the claim within the specified timeframe outlined in your policy ,and be sure to keep copies of all documents that you submitted for your records. Once your claim is submitted, the insurance company will review it and may engage in negotiation regarding the amount of reimbursement. Be prepared to provide additional information or answer any questions they may have during this process.

Handling Insurance Denials

If your insurance provider denies your business interruption claim, the first thing you want to do is carefully read and review the denial letter or communication from your insurance provider. Understand the specific reasons they have given for denying your claim, as this will help you understand their perspective and identify any potential areas of disagreement. Then, go back and review your insurance policy to ensure that your claim falls within the coverage provided, paying close attention to any exclusions, limitations, or conditions that may have been cited as reasons for denial.

If you believe that the denial was unjustified, gather any additional evidence or documentation that supports your claim. This could include financial records, expert opinions, or any other relevant information that strengthens your case. Finally, consult with a professional, such as an insurance attorney or public adjuster, who specializes in insurance claims. They can offer guidance on the validity of your claim and provide assistance in navigating the next steps in the recovery process.


Business interruption insurance can be the difference in having to close your business or being able to keep the doors open when unforeseen circumstances occur. This insurance can fill the gaps that other insurances may not cover. If you’re considering acquiring business interruption insurance, the attorneys at Jimerson Birr can guide you through the process and help you select the right coverage for your business’s needs. If you are having issues with a pending claim, or have already been denied coverage, our attorneys can assess the viability of filing a lawsuit against your insurance provider in order to challenge the denial and seek the compensation you believe you are entitled to.

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