The outbreak of COVID 19 has caused immeasurable damages to the economy, on the flip side, it’s helped to up the attention people place on their health.
Can you file for claims with your insurers, especially as regards the effect of coronavirus has on your business. How do you go about getting help financially for your business to stay afloat especially if you lack coverage for business interruption or if the agreement you have in this regards will not be able to protect you against losses caused by the pandemic. These and more are the things we’ll be looking at in today’s article.
Business interruption insurance?
This type of insurance policy protects you and your business from situations where your business must cease operations because of certain unforeseen circumstance.
This is not exactly an open and shut case, in simplest terms, this policy’s goal is to protect and compensate the business or it’s owner to the tune of its after-tax profit for the time of the interruption.
Not only does it cover just the net income, but business interruption will also cover extra expenses you may incur as a result of the event. For example, let’s say a hurricane hast left your business without power, and now you are running your business operation with a diesel general, carrying around additional fuel and maintenance costs you did not have prior to the event.
It is very possible to get a business interruption policy that will cover you for these additional costs when unforeseen events occur.
During pandemics governments take action, some of them include shutting down businesses. Did yours take a hit from these decisions, will it be indemnified by your insurers?
The fact is that this doesn’t always happen, most insurance firms don’t pay for such situations, and this is because they saw to it that it is made almost impossible. A lot of insurers don’t include pandemic/infectious diseases in their policy agreements and this is very intentional. This came about after the SARS situation which rocked China and other parts of the world.
Will Insurers Be Mandated to Pay for Covid19 Related Losses
Certain groups in the country are demanding that the U.S congress mandate insurers via laws to indemnify businesses for pandemic related losses, irrespective of whether it was part of the policy agreement or not.
This calls most likely will not yield any results. contracts signed are binding; the customers knew the contract they signed. Legislation will not be able to change the details of the contracts; neither will it e able to annul them.
Apply For Government Protection Funds from SBA
The United States government has instituted a program to help small businesses during this coronavirus period. It’s called the Payment Protection Program. So basically this is a kind of palliative measure for businesses that have somewhere between 1-500 staff members.
You can look at it as a kind of insurance for business interruption, but run by the government through the Small Business Administration (SBA). The program’s objective is to minimize job loss and economic disruption brought about due to the lockdown.
With the help of the Small Business Administration and Regional banks, businesses get funds which is 2.5 times more than what they spend on monthly paychecks. These funds are not free, they are low-interest loans, about 2% or less interest rates. And if you meet certain conditions, your business might not have to repay it. If you’d like to have your loan forgiven, here’s what you’d have to do. Make sure all your employers are paid, during this period, at least 75% of their salaries. The funds could also be used to offset other business-related bills.
This funds program will be valid for 2 months, and only the funds you use during this period will be forgotten about, anytime after this you’d have to pay back.
Check with your local government for additional incentives
In the US, the government has chosen to leave the states a high degree of autonomy in choosing how to manage the response to the coronavirus pandemic, and as a result, the economic impacts are vastly different for each state.
Every state has been impacted at some level, and the local governments have sought to be sensitive to their population needs and have enacted incentives at the state and sometimes even more local levels.
Some of these incentives include tax relief, waiving of administrative fees, deadline extensions and even cash incentives in some cases. It really is quite specific to your locality and specific business situation, so we encourage you to check with your local authorities.
If you are not a resident or citizen of the US, then you should check with your country’s government as many countries around the world now have implemented some sort of stimulus program to compensate for the economic effects of lockdown measures governments have undertaken in order to control the spread of the pandemic.
In addition, you should check whether the insurance policies in your country do cover pandemic related losses, as it is important to note that each country’s insurance market is different. This has been a difficult time for all businesses, and you should seek as many opportunities as you can to obtain relief.
Some big companies that received these bailouts have had to refund them, therefore there might be some additional money to go round. And finally, the economy is opening up with a gradual easing of the lockdown, of course in phases. People are being recalled back to work, so hopefully lesser business will be shutting down entirely and before the bailout fund is fully expended, this will have returned to normal.