Does Your Business Have a Business Interruption Claim?

by Frank E. Lamothe, III

If your business has been affected by an event such as the Hard Rock Hotel collapse, you may be able to recover some of your losses. Your two options for recovery are your business interruption insurance and legal recourse against those who caused the event.

What is business interruption insurance?

Your business interruption insurance is designed to cover income the business would have earned had a certain event not occurred. Certain regular operating expenses may also be covered if the business is not functioning such as utilities. There are also extraordinary expenses which are occasioned by the triggering event and maybe recovered under certain policies.

For business interruption coverage to come into play, there must a triggering event which is a covered cause, i.e. an insured peril. This event must result in a physical danger to a covered property resulting in a suspension of operations and an actual loss of income during the period of interruption.

The insured peril must be identified in the policy. The insurance company and courts will probably narrowly interpret the policy language. There must be some damage to a covered property. Where access is prohibited by a civil authority, some policies limit period of loss to specific time period.

Dependent properties or properties on which you rely to deliver materials to you, accept your products or services, manufacture products for delivery to your customers, attract customers to your business may also be a factor.

Some policies require total cessation of operations and others allow partial cessation. ISO defines suspension as follows the slow down or cessation of your business activities.

The covered time period “ends on the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality. This may include a permanent resumption at another location or a partial resumption of operations. Sometimes a case can be made that a new location does not totally “resume operations” because the affected property was a superior location, had entrenched customer base or much better foot traffic.

Claims Against Those Who Caused the Event

When the wrongful conduct of an individual or business causes financial harm to your business, sometimes the harm to you or your business can be severe. Business laws provide remedies to individuals and businesses who have been harmed by the wrongful conduct of another.

Lamothe Law Firm has had substantial success handling a variety of business loss cases for individuals and businesses. Some of these cases included significant recoveries for those whose livelihoods was severely affected by the BP oil spill and Hurricane Katrina. Mr. Lamothe has authored many articles including “Proving Economic Loss in Business Cases” and “Business Torts in Louisiana” and is the Past Chair of the Business Torts sections of the Louisiana Association and the American Association for Justice.

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