Last March, businesses across the state of California were forced to temporarily and permanently shutter their doors. For business owners considering filing an insurance claim for business interruption resulting from the pandemic, now is the time. What’s more, if your business filed a claim that your insurer has disputed, you may need to quickly file a lawsuit or obtain a written extension from your insurer in order to preserve your legal rights.
In California, the duty of good faith requires carriers to investigate claims in a timely manner, pay claims that are owed, or provide a reasonable explanation of the reasons for denial of the claim. Failure to properly investigate claims or issuance of templated denial letters could trigger bad faith claims in all jurisdictions.
If you felt your claim denial was unfair, you are not alone. After receiving countless complaints from businesses stating that certain insurance companies were attempting to dissuade them from filing a claim under its business interruption insurance coverage or refusing to open and investigate these claims upon receipt of a notice of claim, Insurance Commissioner Ricardo Lara and the Department of Insurance issued a Notice requiring insurance companies and other Department licensees to comply with their contractual, statutory, regulatory, and other legal obligations and fairly investigate all business interruption claims caused by COVID-19. Indeed, Insurance Commissioner Ricardo Lara stated “I want to be absolutely clear that insurance companies need to fairly investigate all business interruption claims as they would during any disaster. Policyholders deserve all the services, coverage, and benefits they are due under their policy.”
Generally speaking, business insurance policies that offer coverage for property damage and business interruption contain limitation provisions requiring that a suit against the insurance company for coverage of a disputed claim be filed within a specified period—which can be as little as 12 months from the start of the property damage or business interruption. You will want to review your insurance policy immediately to see when your statute of limitations tolls. An experienced business insurance attorney can help you figure out your best plan of action.
It is important to note that if you are considering pursuing claims for coverage of a COVID-19-related business interruption loss, the claim must be submitted well before any applicable contractual limitations period. To discuss your business interruption claim, contact the experienced attorneys at Webb Law Group today.