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Hurricane Harvey Insurance Coverage Issues for Texas Businesses

An interesting article from Reuters discusses insurance issues faced by some businesses affected by hurricanes Harvey and Irma. It is written by Suzanne Barlyn and can be found at the link below:–finance.html

The first issue involves “business interruption” insurance coverage, which the author describes as among the “trickiest” types of insurance. In a business interruption policy (or often a business interruption “endorsement” to another policy), the insurer is basically agreeing to pay the insured business for its profits lost due to an interruption caused by a covered risk. The Reuters article notes that business interruption coverage generally states that it requires physical damage to the business. The article quotes a Houston-area optometrist, “I think the whole thing is a rip-off.” His business was shut for five days due to flooding in the area but because his office had not suffered physical damage the insurance company denied the claim.

The second insurance issue discussed in the article relates to flood insurance policies. These policies are mainly purchased by homeowners but businesses can buy flood insurance too. As the article notes, business flood insurance does not provide business interruption coverage. However, business flood insurance may cover damage to a business’s building and contents, like inventory or equipment, caused by a flood.

In addition to the issues mentioned in the article, business interruption claims have other complicating factors. Proving damages for lost profits is not always straightforward and so businesses must consult with an attorney to make sure they are getting or keeping the evidence they will need to prove what the business interruption was costing them. Some claims for lost profits will be deemed too speculative or based on unrealistic assumptions about business prospects. Proving lost profits involves looking at the business’s accounting books. The business needs to prove that a loss occurred due to covered cause and prove the amount they are owed.

Business-related insurance claims can present complex coverage issues making it worthwhile to retain an attorney to review your coverage and help you understand it. We can also assist you in presenting your claim to the insurance company. With any type of claim for property damage, the cause of the damage may be critical: some causes of damage will be covered and some causes will be excluded. This sounds simple in theory, but in the real world it is not always clear what caused the damage. If you are faced with a business insurance claim, you should discuss the issue with a Texas insurance coverage attorney. Insurance often works as it’s supposed to, with your claim being accepted and the company paying you. But for this to happen, you need to know what claims are covered and what notice and proof of loss the company will require. An insurance coverage attorney can help your business with both issues.