What To Do If Your Insurance Carrier Denies Your Business Interruption Claim

What To Do If Your Insurance Carrier Denies Your Business Interruption Claim
business litigation

The shutdowns and stay-home orders that grew out of the coronavirus pandemic devastated a number of businesses. As doors closed and profits plummeted, many of these businesses turned to their insurance policies. While companies were hoping for relief from the business interruption clauses in their policies, these claims have been frequently denied. Why have these claims been denied, and what can policyholders do about it? A Connecticut business litigation attorney can answer those questions.

As governments restricted commerce during the coronavirus pandemic, businesses were forced to shutter. Even companies like restaurants that could still do curbside or carryout orders suffered under the lockdowns. Business interruption insurance, sometimes called income interruption insurance, is one potential avenue these companies have turned to for relief.

These policies are designed to compensate companies after they’ve been forced to temporarily close. But they are usually intended to cover events such as fires, weather phenomena, and other catastrophes. They usually do not mention pandemics. Business interruption coverage helps recover lost income and other expenses connected with direct physical loss. In other words, at least according to the insurance companies, these policies generally require a physical loss of some kind.

While a fire can easily be linked to physical destruction to property, the effects of government closures are more nebulous. No one denies that these shutdowns have caused economic losses to all sorts of businesses. But the challenge is showing how they are like storms and other occurrences traditionally associated with such policies. This has led to a flood of lawsuits in Connecticut and elsewhere.

“Direct physical loss” and “physical damage” are common phrases used in these insurance clauses. Carriers have made it abundantly clear that they won’t consider claims that lack actual, physical harm. However, that doesn’t mean their view is correct, and they don’t get the final say. It’s going to take litigation to sort out the matter, and a Connecticut business attorney can help.

This area of law is still evolving because the pandemic is something virtually unheard of in the insurance context. What is clear, however, is that courts in other parts of the country don’t always take the insurance carriers’ side. Indeed, in some states, “physical loss” has included odors and other intrusions that don’t necessarily cause physical damage. A 2002 case in Connecticut involving asbestos at Yale University suggests a possible expansive view of “physical loss” or damage. Decisions from other states can inform Connecticut courts and potentially influence the outcome of these cases.

The important thing is to take action in the event your claim has been denied. Reports are already emerging throughout the state that insurance carriers are quickly rejecting coronavirus-related business interruption claims. But insurance companies make billions of dollars denying legitimate claims. You may be unsure of your legal rights if your carrier has refused to cover your losses. A dedicated Connecticut business litigation attorney can assist.

You should start gathering documents and records that may be relevant to your claim. This includes such items as:

  • A copy of your commercial insurance policy
  • Correspondence between your business and your insurance company
  • Copies of any documents submitted in support of your claim
  • Notes concerning any phone calls or other conversations with your agent or the claims adjuster
  • Profit and loss statements or anything else detailing the economic loss to your business

These and other records will help you get a start on pursuing legal action to enforce your claim. Lawsuits have begun to emerge as businesses take their cases before the courts. If your business has been harmed by the coronavirus pandemic, we want to help.


Insurance companies are in business to make a profit, often on the backs of their policyholders. Our firm is actively investigating how commercial insurance policies may be affected by coronavirus. We encourage you to reach out to us today to discuss your claim and your legal rights. Call Aeton Law Partners to schedule your consultation.

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