Key West attorney talks Business Interruption Insurance

Recouping business losses?

Two types of property insurance may help a business owner recoup some of the revenue lost during the COVID-19 crisis and closures, a Key West attorney said on Monday, March 23.

And fortunately, Key West City Attorney Shawn Smith included specific language in the city’s emergency declaration that could help business owners with these types of coverage recoup some revenue.

 “There are two optional types of property insurance coverage — Business Interruption insurance and Civil Authority insurance,” attorney Darren Horan of Horan Law told Keys Weekly. “Both would be part of an overall property insurance policy, so that’s the first thing a business an owner should check is their policy documents.”

Business Interruption Insurance kicks in when something other than a flood, fire or windstorm causes physical damage to the property and prevents the business from operating, Horan said. 

Civil Authority Insurance covers instances when the government forces a business to close.

“Both types of coverage — and people can have one, both or neither — but they both require physical damage to the property, which is why it was so important for the city to include specific language in its emergency declaration stating that the virus causes physical property damage. That can only help business owners with these types of coverage. Of course, it’s always a fight when dealing with insurance companies, but I’m glad Commissioner Clayton Lopez was at the meeting when I mentioned this needed language and brought it back to City Attorney Shawn Smith for inclusion in the city directive.”

That two-page directive, issued March 21, states, among several other things, that the virus has a propensity “to attach to surfaces for prolonged periods of time, thereby spreading from surface to person and causing property loss and damage in certain circumstances…This order is given because of the propensity of the virus to spread person to person and because the virus physically is causing property damage due to its proclivity to attach to surfaces for prolonged periods of time….”

Horan said he doesn’t know how many businesses have opted for those optional coverages, because many owners believe they’re sufficiently covered by fire, flood and windstorm insurance, “and the additional $2,500 per year, for each type of coverage seems unnecessary,” he said.

But for those who do have the coverage, he advises to first gather their coverage documents and the city’s directive and contact their insurance agent as soon as possible.

“That’ll get your foot in the door,” he said. “Your policy will dictate how much you’re entitled to, but it’s a first step. And if the insurance company denies the claim, the next step is litigation. And we can help with that.”

Mandy Miles drops stuff, breaks things and falls down more than any adult should. An award-winning writer, reporter and columnist, she's been stringing words together in Key West since 1998. "Local news is crucial," she says. "It informs and connects a community. It prompts conversation. It gets people involved, holds people accountable. The Keys Weekly takes its responsibility seriously. Our owners are raising families in Key West & Marathon. Our writers live in the communities we cover - Key West, Marathon & the Upper Keys. We respect our readers. We question our leaders. We believe in the Florida Keys community. And we like to have a good time." Mandy's married to a saintly — and handy — fishing captain, and can't imagine living anywhere else.