California Wildfire Business Interruption Claims

If you own one of the thousands of businesses that have suffered losses from the Northern California wildfires, you already know that claims for damages and insurance coverage is complicated. That’s because there are several types of damage that a business suffers after a catastrophic event like these fires.

In addition to the obvious physical damage to your business’ property and buildings, you must also consider business-specific types of losses, such as lost profits and sales, interruption to your supply chain, and loss of inventory.

Importantly, there is one type of damage that is specifically designed for businesses who have been forced to pause their operations because of a disaster or fire. They’re called “business interruption” claims. And if you’ve had to temporarily cease your business operations, it’s a claim for damages that you should not overlook.

What is a Claim for Business Interruption?

You could be entitled to claim damages for business interruption if you had to stop your business operations as a result of fire damage or destruction. If this is the case, you absolutely need to submit a claim for business interruption coverage from your insurance provider.

Business interruption claims cover the loss to your business when you are forced to cease operations. It allows you to recover the losses you incurred when you had to shut down your business for fire and recovery.

What Do You Need in Support of a Claim?

A claim for business interruption coverage from your insurance company almost always requires that you show a “suspension” in the operations of your business. This must be a complete stoppage of your business activity, but it can be temporary.

In rare situations, a business insurance policy will define this suspension liberally to include for mere slowdowns in your business operations, such as when your business has only suffered a slowdown in business, a reduction in your workflow, or the cessation of only a particular project or aspect of your business. Check your policy to see how business suspension is defined.

However, in most circumstances, insurance policies do not allow for recovery of losses for business interruption if your business has been forced to totally cease operations.

Identify Additional Areas of Potential Damages & Claims

In addition to your physical damages and business interruption claims, you should consider the other types of business-specific insurance claims to which you may be entitled. These can include:

• Extra Expenses. You’re probably facing additional expenses to your business that you normally would not incur had the fire not occurred. These can include cleanup costs, replacement costs for materials, machinery and inventory, relocation costs, increased labor costs and other additional operational costs that are a result of the fire.
• Net Income Loss. Your policy may provide coverage for the loss of net income, or the profit that would have been earned if the fire hadn’t occurred.
• Loss Mitigation Costs. Identify the costs that your business incurred by your actions to mitigate your losses. Perhaps you prepared your business facilities for the fire, which included additional labor and materials. You may have acted to minimize your losses in the wake of the fire to try to get your business back up and running faster. Identify these costs and include them in your claim.
• Professional Expertise Cost. Importantly, some business insurance policies recognize that you may need to hire experts to assist your recovery. If your policy covers this, you can seek reimbursement for professional recovery consultants, such as attorneys and accountants, who help you submit your insurance claim.

Consult an Attorney with Experience in Business Interruption Claims

When there are thousands of dollars on the line with your insurance claims, you can’t risk forfeiting your recovery. That’s why you should retain an attorney who is deeply experienced in filing business loss insurance claims, including business interruption claims.

Our team of attorneys has significant experience advising businesses through every step of the claims process, from analyzing the terms of their policy to submitting claims and disputing insurance companies’ attempts to deny coverage.

We are here to help you protect your rights as a business, and collect the damages and claims to which you’re entitled.