Business Interruption Insurance Claims

When a fire, storm, or other covered loss shuts down operations, a business interruption claim should replace the income the business lost and the expenses it kept paying. As a business interruption insurance lawyer for Illinois companies, Allison Cho Law represents businesses in Chicago and the North Shore when an insurer disputes the amount or length of an income loss, or denies the claim outright.

Business income coverage replaces the net income a business would have earned, plus the normal operating expenses that continue, while damaged property is repaired. It is not a general promise against lost revenue. Coverage usually requires direct physical loss of or damage to property at the insured premises, caused by a covered peril, and many business interruption claims are denied at that threshold. The Seventh Circuit applied that requirement under Illinois law to reject pandemic closure claims in Sandy Point Dental v. Cincinnati Insurance (2021).

Most disputes over business income coverage are about the numbers. The insurer’s forensic accountant projects what the business would have earned, often from a baseline that misses growth, seasonality, or a new contract, and may treat some expenses as noncontinuing. The answer is a better-supported projection: tax returns, monthly profit-and-loss statements, the sales pipeline, and an accountant who can explain the trend. A coinsurance provision on business income can also reduce the payment when the limit chosen at renewal was too low.

Time is the other fight. The period of restoration generally runs from the loss, after any waiting period, until the property should have been repaired with reasonable speed, not until the business actually reopens or wins back its customers. Extended business income coverage, where the policy includes it, pays for a limited time after reopening while sales recover. Extra expense coverage pays reasonable costs of staying open, such as temporary space or expedited equipment. Civil authority and dependent property coverage can apply when the damage is next door or at a key supplier rather than on the insured’s own premises.

Our article on what lost-income coverage pays and how long the insurer can take covers these questions in more depth, and ransomware shutdowns raise their own. If an insurer has disputed the amount or length of an income loss, schedule a consultation before accepting a final number.