Restaurants depend on people coming into their establishment. Unfortunately, there are times when major disasters or business shutdowns occur and negatively affect a restaurant. At Bentley & More LLP, our California business interruption insurance attorneys want to discuss how this type of insurance is used to help restaurants. This includes what it can cover as well as what type of event could trigger business interruption coverage. COVID-19 has dramatically affected how restaurants operate, with most only able to open for drive-through and carry out orders.
Understanding business interruption insurance
It is important first to understand that business interruption insurance is not designed to pay for repairs or losses due to property damage. Business interruption insurance is a subset of insurance protections that a company may obtain to cover the following in the event a business is closed due to a covered loss:
- Net income that would have been earned
- Continuing normal operating expenses
- Extra expenses incurred while restoration is ongoing
This type of insurance is focused on the “period of interruption” and the “estimated profit lost” during that time frame. The period of interruption is the time from when the disaster occurs throughout the time when the physical assets needed to continue business operations are not generating any income.
However, the can be confusion about whether or not restaurants are eligible for this type of coverage when business is halted due to a pandemic, specifically COVID-19. Restaurants have been affected differently than other businesses because many of them remain open in some capacity (drive-through take out) as “essential businesses.” However, other restaurants have closed altogether. While these businesses have not been forced to close due to an issue related to property destruction, they have had to shut down or alter operations due to government orders.
If a restaurant has business interruption insurance, this type of coverage could pay for the losses sustained during the interruption. However, it is important to see how the policy is written. It could have a pandemic exclusion. It could also operate differently for restaurants that remain open in some way (even though restaurants that remain open have lost a majority of their income).
We can help your restaurant with this business interruption case
If you own or operate a restaurant that has experienced a sudden business interruption due to a natural disaster or other unforeseen issue, the Orange County personal injury attorneys at Bentley & More LLP are here to help. As the COVID-19 pandemic continues to affect restaurants in California and throughout the US, we want to make sure that your insurance carrier treats you fairly. These are challenging times for restaurant owners, and a skilled business insurance attorney will thoroughly review your policy to ensure you are treated fairly and that the carrier operates in good faith. This means we want to secure any compensation you are entitled to. When you need a California business interruption insurance lawyer, you can contact us for a free consultation by clicking here or by calling 949-264-0226.