How to make a COVID Business Income Claim – for beginners.

Deep breathe, clear your mind. If any of this feels daunting, never hesitate to reach out and ask a question.  At Advocate Claim Service, we listen to your story, read your insurance policy, and provide you with a no obligation forecast of what could happen.  

Step 1:  Read the insurance policy.

Reading the insurance policy and ask questions of your Broker/Agent is a best practice all the time.  

How to read an insurance policy?  Find the Business Income Coverage Form.  A beginner would do well to review the insuring agreement, rewrite it with the defined terms complete definitions into the paragraph.  This will make clear what is covered. Just be sure to do it verbatim.  

After looking at the insuring agreement, look at the exclusions.  Pay close attention to the words used.  Words are sacred! These words were carefully chosen.  Look for expressed terms that exclude loss caused by or resulting from a Virus or Pandemic.  Not all exclusions are in the body of the Business Income Coverage Form.  Endorsements can add, modify, or change the insurance coverage.

Step 2:  Reserve your rights under the policy.  

It’s never a bad idea to reserve your rights under the insurance policy.  Insurance Companies are going to reserve their rights, and you should reserve yours.  COVID issues are constantly evolving.  It has long been my opinion that insureds know they experienced a loss, but insureds are not experts in the causation of the loss.  A brief example: An insured would know a fire burned their building down, but they would not know the cause of the fire.  Forensic Scientists, fire marshals, qualified engineers, etc. can figure out the cause.  

The following language is being used for educational purposes only.  I make no representation as to the effectiveness of these words.  I do not recommend that the following words be used in any way other than educating yourself.

The Insured’s claim is being made under a full reservation and nonwaiver of all rights and defenses granted to them under the terms of the Policy and applicable law.  The insured reserves their right to change, modify, or alter the claim presented under the policy for any reason, including no reason at all.  If the Insurer, or its representatives, believes at any time that the Insured has waived or are expressly or implicitly waiving any right the Insured may have under the terms of the Policy or otherwise, please immediately advise the Insured in writing so the Insured may have an opportunity to respond in writing.
The Insured reserves the right to assert Policy provisions which may become applicable. No action taken by or on behalf of the Insured should be construed as an admission of liability or construed as a lack of cooperation on the part of the Insured. The Insured reserves all rights, limitations, exclusions, and conditions of the Policy and cooperate with the Insurer’s investigation of this loss, subject to a full reservation of rights by the Insured.

Step 3:  Reporting the claim.

Having read the policy, you saw the page that tells you how to report a claim.  Follow those instructions to keep compliance with the conditions of the contract.  You can also call the agent that sold the insurance policy to you. Some of them will assist with loss reporting or give you information on how to report the claim.

What you say matters, but it won’t matter too much as Insurance Companies are denying all COVID Business Income claims.  No single sentence about your claim is going to result in your claim being paid.  Therefore, you want to reserve your rights, to modify the claim for any reason or no reason.  In most cases, businesses are saying a Government Order closed their business. I have my own thoughts in this area, but they are not for beginners. Basically, I see the Orders as an effect and not the cause.  

Step 4: Contact with the Insurance Company Adjuster.

Someone representing the Insurance Company will call/email you.  Initially they will acknowledge receipt of the claim submitted.  By now they probably have a script of things to run through. I recommend you handle these questions in writing and not verbally when possible.  Request that they email you questions. This gives you time to think about the question, instead of reacting on the fly. Also, “I don’t know, and will need to look into that.” is an acceptable answer!

They may ask to take your recorded statement.  While complying with the investigation is a necessary condition, it is not necessary to do it at that moment.  Request that they send you questions in advance. If you find yourself in a recorded statement, after the initial cadence of introductions and disclosures, read the reservation of rights paragraph you prepared for your loss submission.  Do it again at the end.  Before the recording ends request that a copy of the recording be sent to you along with a transcript – get their agreement on the recording!

No matter what is said, two things will certainly happen.  1) A letter, either a reservation of rights or a denial letter will get issued. 2) A questionnaire will seek more details.

Step 5: A coverage Denial is a beginning, not an end.

In my line of work, a denial letter represents the start of dialog and not the end.  Often the issuance of a denial letter results in burden shifting.  The insured has a duty to make the claim, an insurer has a duty to apply the policy to the claim made.  The insurer deciding that coverage does not apply shifts the burden to the policyholder to demonstrate coverage does in fact apply.  Need help? Don’t be shy!  

David R Princeton, CPCU, AMIM, AIC, CSRP
Principal Consultant
Advocate Claim Service, LLC.

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