Person closing their business

COVID-19 Business Interruption Insurance Claims – What You Need To Know

May 27, 2020
By Rhine Law Firm, P.C.

At the start of 2020, none of us could have imagined how this year was going to start out. Local businesses wrapped up the holiday season and were planning for the rest of the year. Then the Coronavirus hit. Non-essential business were forced to close or drastically alter operations. Overnight, life changed for business owners and employees of gyms, salons, boutiques, restaurants and other many other businesses. In an area heavily dependent on tourism, the loss of visitors, business conventions, vacation rentals, and events has had a massive trickle-down impact. Employers everywhere were forced to furlough or layoff employees, forced to get loans just to keep their heads above water – and even then, many were unable to stay afloat. Every sector of our economy has been affected – at levels not seen since the Great Depression. And, as a result, many business owners turned to their insurance companies for relief from their COVID-19 related damages only to find their claims denied.

For most, your commercial property insurance policy normally only covers the cost of repairing and replacing damaged property when a covered loss occurs. Because those policies do not cover ‘consequential’ damages — that often occur during a closure or slow-down, business owners may add business interruption coverage and other forms of insurance to their policies.


  • Also known as Business Income and Extra Expense Insurance
  • Part of commercial property coverage
  • This coverage is purchased in addition to commercial structure/business personal property coverages
  • An Additional Premium is collected
  • Covers the loss of income and additional expenses that a business suffers after a disaster

if you are one of those business owners with the foresight to have planned ahead and you purchased business interruption policy (that perhaps even your insurance agent recommended), then why is your insurer now denying coverage for the very protection you bought and paid premiums on? Premiums you might have paid for years without ever making a claim!

Simply put, the insurance business is a numbers game. It is about taking premiums to cover anticipated risks and then ensuring that claims paid do not exceed the premiums or the reserves insurers have set aside to handle future losses. In addition, insurers often use your premiums to then “re-insure” their risks of having to pay on covered losses.


  • Basically, in today’s environment, the insurance companies are demanding that their insureds prove that their premises were physically damaged by the COVID-19 virus in order to trigger coverage.
  • The insurers actually want the insured to present test results for the coronavirus, etc.
  • We disagree with that interpretation of these clauses and are filing suit based upon several theories, including one based upon a series of cases that indicate the loss of access to or use of a property constitutes “physical loss” and triggers coverage.


These times are unprecedented.

Indeed, unlike most natural disasters, nearly every state governor issued executive orders declaring states of emergency as a result of COVID-19. Those orders limited the interaction among members of the public in ways that severely curtailed businesses from making money. In some states, non-essential businesses were closed, resulting in some 38 million (and counting) displaced workers across the country.


Civil Authority Coverage should provide loss of income and extra expense coverage when a governmental authority (civil authority) prohibits access to the premises due to direct physical loss of or damage to an-other’s property.

Although many policies have virus exclusions, not all exclusions are the same.


  1. Get your policy (including endorsements and exclusions) from your agent.
  2. Email it to us for a free evaluation and tell us how your business was impacted.
  3. Make a demand under the policy. This is the language we suggest you use:

Our business has lost income, had extra expenses, and suffered other losses as a result of the recent events and circumstances surrounding the Covid-19 pandemic, including people staying at home. We are hereby presenting a claim for all coverages available under my business policy or policies for this loss of income and extra expense. This claim includes, but is not limited to, a claim for normal continuing expenses plus gross profit, lost income, extra expense, or any other similar benefit available under our policy or policies.

The Business Interruption Practice at the Rhine Law Firm, P.C. may be able to help. Our attorneys work with business owners, just like you, to level the playing field, giving you back the tools to take on any Goliath of an insurance company.

Our firm provides offers our business clients a comprehensive review of their insurance policies to determine if there is a possibility for coverage for COVID-19 losses. If there happens to be an Endorsement within a policy named “Exclusion of Loss Due to Virus or Bacteria” containing the ISO number CP 01 40 07 06, we won’t be able to help.

But it that endorsement is not there, we can help.

Our firm can assist clients in making a claim if one has not been made already, working to maximize the potential for coverage before an insurer’s decision to deny coverage has been made. And, even then that happens, our firm is prepared to file suit in either state or federal court to seek declaratory relief and damages in a breach of contract action.

We continue to monitor developments across states where we have clients to ensure that we stay aware of legislative efforts underway that could require insurers to provide coverage for business interruption losses.


COVID-19 Resources

Small Businesses Administration (SBA) Resources:
  • All Programs and resources:
  • Economic Injury Disaster Loan Program
    • The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
NC Business Relief Resources:
Resources for Individuals
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