Should You Sue When Business Interruption Insurance Refuses Your Claim?

In recent times, many businesses have experienced "business interruption," a situation in which they were forced to close their doors owing to circumstances beyond their control. Those with business interruption insurance may have felt confident that they could claim against it, but many insurers have refused to pay out or have paid far less than the insured business expected. If this happened to you, should you sue?

All in the Fine Print - Should You Give Up?

As so often happens when we try to claim against insurance, the company in question will point to one or another clause in the "fine print." Sure, your insurance may be labelled as "business interruption insurance," but certain exclusions may indicate that you won't be able to claim against the type of business interruption you recently experienced.

In addition, business interruption insurance may not cover all the costs of business closure. Experts recognize three levels of cover:

●      Loss of income and the cost of ongoing expenses during closure

●      Additional cover for expenses incurred in order to continue doing business

●      Additional cover (contingent cover) for supply-chain interruptions or because B2B clients weren't able to operate.

Unfortunately, all three types of insurance depend on the cause of the business interruption and whether it is covered under the policy.

Does that mean you should give up and roll as well as you can with the punches? Not necessarily. Some legal firms have specialized in business interruption insurance disputes and are branding themselves as Business Interruption Lawyers. They may be able to help you.

Fine Print - Does it Stand up to Fine Examination?

Legal wording and terminology can be confusing, and even the experts who write insurance contacts could be leaving their clients open to litigation. Simply put, your insurer might think that its contractual terms are watertight when they are, in fact, open to question.

For a business reeling under the weight of business closure costs, a few dollars spent on close legal examination of insurance contracts could lead to a successful settlement - even if that means taking the insurer to court to get it. Of course, it could also mean walking away empty-handed knowing that there's no chance of successful litigation. Either way, it's money well-spent. For most of us, it's a case of not knowing until we ask an expert, and even if his or her answer isn't in our favor, we can at least know that we tried.

Be Warned: It Depends on Legal Precedents in Each Jurisdiction

Some of us may have read of businesses who successfully challenged insurers based on contractual clauses similar to ours. Unfortunately, that doesn't necessarily mean that the same ruling will apply to you.

The interpretation of legal language can differ depending on the court that handles your case, and whether the one that favors you applies in your area will depend on previous judgements. Once again, professional help from legal experts who have been monitoring previous court judgements is necessary.

All in all, there will be good news for some and bad news for others when consulting lawyers about refused business interruption claims. Consulting a legal expert is worthwhile, if only because you'll have clarity as to whether you should or should not sue your insurer.

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