Pardon the (Business) Interruption: Does Your Business Really Have Coverage?

In the wake of the 2024 hurricane season, many Florida business owners are taking a closer look at their insurance policies. You might be surprised to learn what your business interruption insurance actually covers.

What is Business Interruption Insurance?

While traditional property insurance protects against damage to your physical property, business interruption insurance helps cover lost income when your business can’t operate due to property damage. Typically, this insurance is part of your commercial property coverage. However, if there’s an exclusion in your property policy, it can also affect your business interruption coverage. For instance, standard commercial property policies often exclude flood damage, meaning you may not have coverage for income loss related to floods.

Understanding Exclusions and Limits

Even if your business faces a disruption from a covered event, certain exclusions or limits within your policy can complicate claims. The specific language in your policy is crucial for determining whether a claim will be honored. For example, if you manage short-term rentals and face cancellations after a hurricane, insurers might claim the losses are due to a general economic slowdown rather than direct damage to your property. Similarly, if a retail store experiences income loss because of a supplier’s property damage, the insurer may deny the claim due to lack of direct damage to your own property.

Why You Should Consult an Attorney

Given these complexities, it’s important for businesses to consult an attorney to review their insurance coverage. Understanding what your policy covers—and what it doesn’t—can significantly impact the viability of your claims.

If you need assistance navigating your insurance policies, please reach out to your attorney at Johnson Pope LLP. If you don’t have an attorney, we can connect you with someone in our firm who can assist you. Additionally, we can help you document your claim in a timely and thorough manner, which is essential for a successful outcome.

David M. Stupich is admitted to the Florida Bar, Indiana Bar, and a former insurance agent.