Archives: FAQs

My insurance company denied my Business Loss claim – what can I do?

A policyholder has recourse against the insurance company in the form of a lawsuit. Insurance companies know that even though an insured individual can file a lawsuit at no upfront cost to the insured (i.e. a contingency based lawsuit), such lawsuits are time consuming. In many cases concerning widespread losses, insurance companies make a financial bet that their payout in the form of lawsuits would be less than if they honored their claims.

Business interruption insurance is, by definition, a first party claim. A “first party claim” involves a policy holder filing a claim against their own insurance company. This terminology differs when a claimant asks someone else’s insurance to cover a loss, which is called a “third-party claim” and often rises in the case of a vehicle collision.

Many states offer additional protection to first party claimants to prevent insurance companies from acting in “bad faith.” In the insurance context, “bad faith” means that the insurance company did not act fairly. Examples of “bad faith” can range from an insurance company misrepresenting the language in the policy to avoid paying a claim to unreasonable demands on the policyholder to prove a covered loss, and many circumstances in between. Upon a finding of “bad faith” it is not uncommon for a Court to award three times the amount of the insured’s damages against the insurance company and require the company to pay the insured’s attorney’s fees. Such practices are intended to keep insurance companies accountable.

What circumstances “trigger” my Business Loss Insurance policy?

It depends on your policy, but typically if the circumstances affecting your business are the same as those covered in your policy, your business loss claim would be triggered. In the context of COVID-19, such triggering circumstances arose when various state and local governments prevented businesses from operating.

Policies offered by The Hartford typically contain a clause in the policy related to a “civil authority” shutdown. The majority of businesses in the United States were under such orders, and if business losses occurred as a result of such orders the policy would be triggered.

business income loss clause
Figure 1: Text taken from a Hartford Insurance Policy

Why should I choose you over other firms?

The Cobos Law Firm and the Ammons Law Firm have pooled our experience and resources to provide the best possible representation for businesses who are seeking to file a business interruption claim. Andrew Cobos is a West Point graduate and U.S. Army combat veteran, whose firm fights insurance companies every day.

The Ammons Law Firm is a top-tier trial firm with a solid track record of success, including Rob Ammons’ $82.5 million-dollar verdict in the Texas Verdict Hall of Fame.

Collectively, we are focused on providing top-notch legal representation while promoting the highest ethical standards and achieving superior results.

How much will it cost to represent me?

We represent clients on a contingency fee basis, which means you pay no upfront costs and we only get paid if we win your case.

Our fee is 33.3%, which is a fee that is substantially lower than many (if not most) law firms who are handling business interruption insurance cases. We know that the viability of your business requires as much capital as possible in the post-coronavirus era, and we will seek to get you the largest recovery possible.

Can you represent me if my business is in a different state?

Yes. We have thousands of clients in different states and represent these clients in Courts all over the United States. It is possible that these cases will be consolidated into a single Court in a particular state. In such a case, our attorneys will file for admission in that Court and be able to represent you in any state.

How do I file a legal action against my Insurance?

Initiating legal action requires hiring an attorney to file a lawsuit against your Carrier to enforce the insurance policy.  The recovery of certain damages also requires a “notice” letter, which is a process that is straightforward for an experienced insurance coverage attorney.

You can see if you qualify and file a legal claim completely online .

Do I need to file a claim before seeking legal action?

No. It appears that many Carriers are denying business loss insurance policies as a matter of course. Honoring these policies would put them in a precarious financial position, and they have choses to safeguard their business instead of yours.

A business owner certainly has the right to file a claim but doing so is likely to result in unnecessary (and potentially costly) delay.

Why is my Insurance Carrier denying my Business Loss claim?

In most cases regarding business losses from coronavirus, insurance companies are doing what they do best: denying claims.  Most of these denials are likely made in bad faith for the overriding purpose of profitability for the insurance company.  After all, insurance companies follow a simple business model built on maximizing their profitability:

Revenues (i.e. premiums) – Overhead (i.e. expenses) – Claims Payouts = Profits

By denying business interruption claims—even if such claims are proper—insurance companies can increase profits. Given such bad faith practices, it is no wonder why The Hartford’s market cap is currently $12.7 Billion, Allstate’s at $32 Billion, and AIG’s an impressive $72 Billion.

The insurance company, of course, cannot state that outright denial is their objective from the start. For this reason, they will find language in the policy that they claim excludes the policy from being effective. The exclusions they will point to often concern viruses, bacteria, and micro-organisms, but rarely, if ever, do they interpret these provisions in a light favorable to the policyholder, even when explicit language in the policy covers government shutdowns.

Is COVID-19 excluded from coverage in my insurance policy?

First it is helpful to define the term “exclusion.” In the insurance context, an “exclusion” is a provision that negates insurance for some type of risk. Exclusions narrow the scope of what the Carrier is obligated to cover. Sometimes the insurance agreement uses very broad language. Carriers use exclusions to carve away coverage for some risks they are unwilling or unable to insure.

In the COVID-19 context, some commercial insurance policies include language that expressly exclude coverage for damages caused by bacteria, viruses, or microorganisms.

The primary things that you should look for in a commercial policy are:

    1. Business interruption coverage
    2. Civil authority coverage
    3. Microorganism coverage
    4. Any coverage exclusions

Do I have Business Loss Insurance?

It is likely that if you have a commercial insurance policy, you have some form of business interruption insurance. Most commercial insurance policies are lengthy and account for some type of business interruption coverage, even if this point was not specifically negotiated during the purchase of the policy.