Nearly a third of small business owners are struggling with cash flow issues in the wake of government-mandated closures to stop the spread of the coronavirus, according to a survey of small- and medium-size-business owners conducted by Facebook and the Small Business Roundtable. Many of them have sought relief from their insurers for the business interruption insurance they’ve been paying on for years only to get slapped with a rejection.
Business interruption insurance is part of a business owner’s insurance policy. It provides coverage for payroll and other operating expenses in the event a business has to temporarily close due to a disaster, such as a hurricane or tornado. The policies provide a lifeline to businesses that would otherwise face permanent closure when faced with such circumstances.
When the global coronavirus pandemic reached the United States, states and local governments ordered shutdowns and sheltering in place, forcing many businesses like restaurants, bars, salons, and retail stores to temporarily close. The loss in business has been stifling, leaving 31% struggling to survive. Some have announced they are closing their doors for good. Many have filed claims against their business interruption insurance policies, but their insurers say that their coverage does not include closures due to pandemics.
While some policies do include virus exclusion clauses, most who are rejecting claims do not. Many businesses have filed lawsuits against their insurance companies seeking coverage they believe they deserve.
Despite the struggle, 57% of small and medium size businesses say they are optimistic or extremely optimistic about the future of their business, and only 11% say they expect to fail in the next three months if current conditions persist.
Beasley Allen is actively pursuing cases with clients whose insurance companies denied their business interruption claims. Dee Miles, Head of our Consumer Fraud Section, Rachel Boyd and Paul Evans are spearheading this litigation for our firm. They would like to talk to you about any potential claims. Contact us for a free consultation regarding your business interruption insurance claims.