COVID-19, Retailers, & Business Interruption Insurance in California

May 6, 2020 Business Interruption Insurance

These are incredibly difficult times for California’s brick-and-mortar retailers. When shelter-in-place orders went into effect in response to the COVID-19

a person pointing at an insurance policy   to read the fine print on their desk.

These are incredibly difficult times for California’s brick-and-mortar retailers. When shelter-in-place orders went into effect in response to the COVID-19 pandemic, many retailers who were not deemed “essential” were forced to close their doors indefinitely. While some businesses were able to offer online purchasing or curbside delivery service, many others could not adapt – for practical or financial reasons. 

Popular tourist destinations in Los Angeles have been especially hit hard, as many establishments rely on vacationers for a substantial portion of their sales. The complete drop in tourism and temporary closures caused by the coronavirus outbreak means that both small retail shop owners and large retail chains are turning to their commercial property insurance policies for protection. 

Economic losses from the COVID 19 Pandemic

When retailers are forced to shut their doors, their economic losses go beyond stale inventory and lost sales. There are utility bills to be paid, payroll to be met, and rent or mortgage payments that cannot be ignored.

It is not surprising that the first wave of business interruption insurance claims was quickly denied – and done so without proper investigation. Now more than ever, it’s absolutely vital that retail establishments review the provisions and language of their policies, specifically with regard to contingent business interruption insurance and/or civil authority coverage.

Both of these coverages should, in theory, reduce the economic burdens caused by the COVID-19 crisis.

Retailers turning to Business Interruption Insurance

Business interruption insurance is a common supplement to a property insurance policy, which covers losses caused (either directly or indirectly) by specified perils. Causes of loss that are not outlined in the policy are normally not covered. Business interruption coverage is generally triggered in cases where you have physical property loss or damage that causes the interruption – for example, flooding or fire damage.

Insurers are now claiming that retailers were not ‘physically affected’ by the coronavirus quarantine orders, or that since no physical damage occurred, the benefits aren’t triggered. Policyholders should bear in mind that past rulings, or case law, suggest that coronavirus contamination or a property’s inability to be inhabited may constitute physical loss activating coverage for business interruption losses.

The presence of an infected person or an infectious illness can render a retail store uninhabitable, and once this is demonstrated, retailers may be able to collect on their insurance claim.

Civil Authority Coverage

California retailers that have civil authority coverage and were ordered to close their doors may be able to secure compensation for their losses. Civil authority coverage protects against business interruption losses when a state or federal government authority prohibits or hinders access to the policyholder’s business location. Depending on the policy’s language, civil authority coverage may stipulate that access restriction stems from physical loss.

Contingent Business Interruption Coverage

Contingent business interruption insurance may offer another safeguard against COVID-19 losses. This protects your retail business from disruptions that affect your overall supply chain. If you have lost substantial income and are unable to stay afloat after a key partner, supplier, or customer base has problems, this coverage pays for ongoing costs while you search for remedies.

Litigation over pandemic related BI loss claims

The cost of covering Business Interruption claims in the wake of the pandemic will cost insurers billions of dollars. But will insurers pay benefits for COVID-19-related business interruption, or continue with generic denials?

According to the Commissioner for the California Department of Insurance, this will ultimately be decided by our courts and judicial branches. Although the Commissioner acknowledges the ‘real and alarming losses’ faced by business owners throughout the state, he concedes that the answer will lie in the specifics of each policyholder’s contract.

COVID 19 Business Interruption Insurance Claims for Retailers

If you own a retail establishment whose business interruption claim was denied, you are encouraged to file a request for assistance with the California Department of Insurance. Your next step is to consult with a Los Angeles business interruption insurance lawyer who can protect your rights.

Reach out to Salamati Law for a free case review today. Our team is proud to assist CA retail and business owners to seek the payments they deserve under the business interruption insurance policies.

Additional Resources:

  1. JDSupra Legal News, California: Developments in COVID-19 Business Interruption Claims
  2. California Department of Insurance, FAQ on business interruption insurance and other issues affecting California small businesses
  3. The National Law Review, Update: Business Interruption Insurance in the Time of COVID-19
  4. Congressional Research Service, Business Interruption Insurance and COVID-19
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COVID-19, Business Interruption Insurance, and Hotels in California

May 6, 2020 Business Interruption Insurance

The travel and leisure industry has suffered unprecedented losses as a result of the coronavirus pandemic. Hotels have been particularly

The travel and leisure industry has suffered unprecedented losses as a result of the coronavirus pandemic. Hotels have been particularly hard hit, with occupancy and revenue rates falling by 50% or more. 

Hotels that carry business interruption insurance may be able to recover some of these losses by filing and pursuing claims with their insurance carriers. California hotels that need assistance in filing a claim or whose insurers have denied their claim should contact the Salamati Law Firm in Los Angeles. Southern California business interruption insurance attorney Sean Salamati can advise you of your rights and legal options for reimbursement of lost revenue.

Business Interruption Insurance Coverage for California Hotels

Many insurance companies announced at the outset of the pandemic that commercial business interruption policies only cover losses that are related to physical property damage. Regulators and business interruption lawyers quickly responded that at least two other business interruption insurance provisions covered lost revenues due to coronavirus cancellations:

Civil Authority Business Interruption Insurance Coverage 

Governmental actions that preclude the use of a hotel property can trigger business interruption coverage under “civil authority coverage” extensions or riders to commercial policies. These clauses might provide insurance coverage for losses resulting from state and local quarantines, for example, that restrict public gatherings. Commercial insurers will likely argue that quarantine orders affect people, not properties, but that argument might be contrary to history and specific policy language.

Contingent Business Interruption Insurance Coverage

Policies that include “contingent business interruption” extensions or riders might provide reimbursement for lost hotel revenues, for example, associated with supply chain interruptions, canceled events, or loss of use due to decontamination or cleanup.

Industry observers expect commercial insurers to reject civil authority and contingent claims (at least initially) for coronavirus-related business interruptions. California hotels should consult with a knowledgeable and experienced business interruption lawyer to verify their coverage and to rebut any coverage denials from their insurance carriers.  

Covered Losses for Hotels Under Business Interruption Insurance Policies

Businesses in the travel and hospitality industries are often the first to feel the effects of economic downturns, disasters, and restrictions on movement. Many hotels, airlines, event organizers, and similar businesses have been at the forefront of defining the types of claims and losses that are covered by business interruption insurance.

For example:

  • In 2003, hotels in Hong Kong successfully petitioned for business interruption insurance coverage caused by the SARS virus;
  • In 2004, a court awarded a favorable opinion to USAirways against its commercial business interruption insurer over lost business claims related to the September 11, 2001, terrorist attacks; 
  • In 2016, a theater group recovered its losses for canceled outdoor performances following wildfires that impaired air quality.

Hotel business interruption insurance coverage is always a function of insurance contract language and the specific facts that cause the hotel to lose bookings and associated revenues. A California hotel that has lost substantial business due to COVID-19 quarantines and cancellations should carefully review their commercial insurance policies and should either notify their insurers or file their claims promptly.   

Use Hotel Records to Prove COVID-19 Business Interruption Losses

Hotels should keep detailed records of bookings and payments, as well as pending reservations, cancellations, and special events. A successful business interruption insurance claim by any hotel in Los Angeles or elsewhere in California will necessarily include this and other information to verify coronavirus business losses. Hotels will have a better chance to recover insurance reimbursements for lost revenues when those records are thorough, straightforward, and verifiable.  

California Insurance Regulators are Encouraging Business Interruption Payments

California’s insurance commissioner has imposed new requirements on insurance companies to conduct full and fair investigations of all business interruption claims relating to losses from the COVID-19 virus. Insurance companies that are authorized to issue policies in California are specifically obligated to comply with their obligations under insurance contracts, to promptly acknowledge claims and provide all necessary forms and information to file claims, and to issue notices of acceptance or denial within 40 days after receiving a claim.

Given these enhanced requirements, an insurer’s denial of a hotel’s coronavirus business interruption claim will likely draw greater scrutiny from the state’s insurance regulators.

Call for Assistance with Business Interruption Insurance and Coronavirus Claims

Hotel bookings and revenues will recover. Until then, hotels should not hesitate to file business interruption claims under their commercial liability policies.

A Los Angeles business interruption insurance lawyer from Salamati Law Firm is a hotel’s best resource to process and file claims and to appeal claim denials. Please call Salamati Law’s Los Angeles offices to schedule a consultation with one of our lawyers today.

Additional Resources:

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COVID-19 Resources & Tips for California Businesses

May 5, 2020 Business Interruption Insurance

The coronavirus pandemic is an unprecedented economic event, and thousands of small businesses throughout California have taken a devastating hit.

a desk with contracts, a pen, a pair of glases and a person pointing at the top page of an insurance policy.

The coronavirus pandemic is an unprecedented economic event, and thousands of small businesses throughout California have taken a devastating hit. Despite the dire ramifications of this large-scale catastrophe, many of the state’s top insurance companies are not paying business interruption claims related to COVID-19.  In fact, insurers were quick to declare a lack of coverage even before the first claim was filed. 

Policyholders deserve all of the benefits and services they are due under the terms of their contract, and when insurers fail to comply, it’s time to seek legal counsel from Salamati Law.

The COVID-19 crisis has ushered in an era of uncertainty for California businesses that have no real timeline of when – or how—their doors can re-open. During stressful times like these, it’s reassuring to know there are resources and funding available to help small and medium-sized businesses impacted by COVID-19.

Tax Relief

Small and medium-sized businesses in California struggling amidst the COVID-19 outbreak can take advantage of the following tax breaks: 

  • 3-month extension on all businesses filing a tax return for less than $1 million
  • Business taxpayers with less than $5 million in taxable annual sales can have a 12-month, interest-free, payment plan for up to $50,000 of sales and use tax liability only


  • U.S. Small Business Administration’s Paycheck Protection Program (PPP): Small businesses with fewer than 500 employees or individuals who operate as an independent contractor/sole proprietor may be eligible for loan forgiveness (up to 8 weeks) of payroll based on employee retention and salary levels. Loans can be put toward rent, mortgage interest, utilities, and payroll. Application deadline: June 30, 2020
  • California IBANK Disaster Relief Loan Guarantee: Small businesses located in California with 1-750 employees that have been negatively impacted or experienced disruption by COVID-19and qualifying non-profits can use the loan proceeds toward business continuance or economic disaster relief.
  • SBA Express Bridge Loans: Small businesses that have a current business relationship with a Small Business Administration Express Lender can apply for a $25,000 loan with a quick turnaround.
  • The Small Business Emergency Microloan Program was recently launched by the City of Los Angeles. Loans amounts range from $5,000 -$20,000, with terms from 18 months to 5 years. Eligible businesses must be established in the City of L.A. with 100 or fewer employees and be for-profit and tax-exempt.


Hello ALICE: COVID-19 Business Emergency Grant

Hello Alice is offering $10,000 business emergency grants to small business owners affected by COVID-19. In addition to immediate funds, grant recipients will benefit from continuing guidance from the Hello Alice community.

LISC Small Business Grant

LISC is offering grants of up to $10,000 to support small enterprises and business affected the coronavirus pandemic, particularly those in underserved communities. Applications are due by May 14, and will be evaluated based on particularly challenged businesses that lack access to flexible capital.

Salesforce Care Small Business Grants

For profit-companies with a yearly revenue between $250,000 and $2 million and have fewer than 50 employees may qualify for a $10,000 grant to help overcome financial burdens associated with COVID-19. Eligible candidates must have been in business for 2 years as of March 2020.

Facebook Grants

Facebook has earmarked $100 million in cash and ad credits for small businesses that have been affected by the coronavirus outbreak.

GoFundMe Small Business Relief Grants

GoFundMe is offering donation-matching micro-grants of up to $500 for independently owned and operated small businesses hurt by the COVID-19 pandemic.

Representing business owners in Southern California

As a policyholder, you have rights. If you run into problems or need expert legal advice, contact Salamati Law for a free consultation with a Los Angeles business interruption insurance lawyer. Local businesses are the very backbone of our communities, but they are facing unprecedented challenges, especially in the hospitality, retail, and personal service sectors. Moving forward, it’s important to remain flexible, get creative, and track your losses.

Additional Resources:

  1. California Government, Coronavirus 2019
  2. Venturize, COVID-19 EMERGENCY LOANS
  3. Los Angeles Chamber of Commerce, COVID-19 (CORONAVIRUS) RESOURCE GUIDE
  4. LA Times, Congress passes expanded small-business loan funding to address coronavirus shutdowns
  5. LISC, LISC Small Business Relief Grants
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COVID-19, Business Insurance, & the Restaurant Industry

May 5, 2020 Business Interruption Insurance

In the interests of public health and safety, many states, including California, have issued stay-at-home orders that shut down non-essential

In the interests of public health and safety, many states, including California, have issued stay-at-home orders that shut down non-essential businesses. While these measures are necessary for saving human lives by curbing the transmission of the coronavirus, they have had a devastating effect on the economy.

The restaurant industry, in particular, has been hard hit. Since the start of the COVID-19 outbreak in the U.S., over eight million restaurant workers have been laid off or furloughed. In addition, the National Restaurant Association has predicted that the restaurant industry alone will lose approximately $80 billion in sales by the start of May 2020.

The restaurant industry in the U.S. has never been faced with such a monumental challenge, and when this industry takes a hit, so too does the entire country. The industry contributes about $900 billion to the economy annually and employs well over 15 million people. In short, what is bad for the restaurant industry is bad for the country as a whole.

So, what can be done about this problem? Some restauranteurs are turning to their business interruption insurance for the answer. Filing California coronavirus business interruption insurance claims are thought to provide a way for restaurants to bridge the gap while waiting for the COVID-19 pandemic to resolve.

Can California coronavirus business interruption insurance claims help?

Every business needs at least one type of insurance. One smart policy for restauranteurs to purchase is business interruption insurance. It’s intended to replace the lost income and extra expenses caused by covered perils. Restaurant owners have traditionally used business interruption insurance to help them survive damage due to theft, fire, lightning, floods, and similar disasters.

Now, an increasing number of restaurateurs are turning to their business interruption policies in hopes they will consider the coronavirus to be a covered natural disaster. And when those claims are denied, there is a possibility of pursuing litigation against the insurance carrier to secure coverage.

California requires insurance carriers to investigate all COVID-related claims

On April 14, the California Department of Insurance released a statement regarding the restaurateurs filing coronavirus-related claims against their business interruption insurance policies. Insurance Commissioner Ricardo Lara stated that his department had issued a notice that requires insurance companies to comply with all contractual and legal obligations, and to “fairly investigate all business interruption claims caused by COVID-19.”

This statement came on the heels of multiple complaints Lara’s department has received from businesses and similar stakeholders. They claimed that various insurance representatives were attempting to discourage policyholders from filing claims because of COVID-19.

Other policyholders have reported that their insurance carriers have outright refused to initiate or to proceed with coronavirus-related business interruption claims. Commissioner Lara’s statement is promising for restauranteurs in California who have been forced to shut their doors and lose income due to COVID-19.

Legal recourse for restauranteurs with denied claims

Unfortunately, restaurant owners in California still can’t rely on their insurance carriers to do right by their claims. Restauranteurs who have filed California coronavirus business interruption insurance claims and have been denied (or have had their insurance carrier refuse to initiate a claim) may have avenues for legal recourse. Filing a lawsuit may be a viable solution.

Law offices across the country are expecting a wave of restaurant owners to file these types of lawsuits against insurance carriers, given the sheer scale of the economic losses the industry has suffered. One of the first restaurants is the Oceana Grill, located in New Orleans, Louisiana. The Oceana Grill filed its lawsuit against insurer Lloyd’s of London.

The complaint notes that the plaintiff’s insurance policy has coverage for the interruption of business by order of civil authority, and the lawsuit asserts that the government mandate to close non-essential businesses falls into this category.

Schedule a business interruption insurance consultation today

In Los Angeles and throughout Southern California, Salamati Law has acquired a reputation for vigorously defending the legal rights of its clients and aggressively pursuing favorable resolutions on their behalf. We have been providing legal representation to individuals in the area for two decades. If your restaurant has suffered a loss of income due to COVID-19, and you are attempting to file a business interruption insurance claim as a result, you can find the strategic guidance you need at the Salamati Law.

Contact us today to request a free initial consultation with a results-focused attorney. We are currently accepting new business clients who grossed $200,000-plus per month before the coronavirus outbreak. A Los Angeles business interruption insurance lawyer will review your case and advise you on the merits of pursuing litigation.

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