Many businesses damaged or evacuated because of natural catastrophes can expect lower insurance payouts from business-interruption claims after bringing in less revenue during the pandemic.
As insurers brace for an expensive natural-disaster season because of storms and wildfires ravaging parts of the United States, the novel coronavirus is giving them an odd financial break. Many companies that were damaged or evacuated because of natural catastrophes were already generating far less revenue due to the pandemic. That means they will get lower payouts upon filing business-interruption claims, according to analysts, lawyers and industry sources. It is another hit for small businesses that rebuilt after major disasters in recent years, only to see revenue screech to a halt during the pandemic, and then enter another aggressive disaster season. It could leave some companies unable to survive, said John Ellison, an attorney at Reed Smith LLP who has represented policyholders in cases stemming from hurricanes Katrina, Rita and Sandy. “There is a reasonable chance that any business in that situation is not going to make it,” he said. Claims are never simple to file or process, with insurers, lawyers and accountants quibbling over calculations. They rarely cover all losses. The past several months have been particularly tough for policyholders in states like California, Iowa and Louisiana.
