Business Interruption

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Whether the cause is a natural disaster, fire, water damage, or a public health emergency, the financial impact of a business shutdown can be catastrophic. Lost revenue, ongoing rent or mortgage payments, payroll obligations, and vendor contracts continue to mount even when customers cannot walk through the door. For many companies, the difference between survival and permanent closure comes down to whether their insurance carrier honors its promise.

At Timothy D. McGonigle, PC, we represent California businesses in disputes with insurance carriers over business interruption claims. With over 40 years of trial and litigation experience, Timothy has the knowledge, resources, and persistence to take on powerful insurance companies and fight for the coverage you deserve.

Why Business Interruption Claims Are Denied

Insurance companies have a reputation for protecting their own bottom line—and business interruption claims are no exception. Carriers frequently argue that policies don’t cover certain events or attempt to narrow the language of coverage. Common denial tactics include:

• Arguing that losses were not caused by “direct physical damage.”
  

• Claiming that viruses, pandemics, or government shutdowns are excluded.
  

• Disputing the length of the business closure and the amount of claimed damages.
  

• Alleging poor documentation or incomplete records by the business owner.
  

• Misrepresenting ambiguous policy language in the insurer’s favor.
  

For business owners who are already struggling to keep the lights on, a wrongful denial can be devastating. Timothy’s role is to hold carriers accountable and enforce the coverage that policyholders have faithfully paid for.

What Business Interruption Insurance May Cover

Depending on the terms of your policy, business interruption coverage may include:

• Lost Income: Compensation for revenue you would have earned had your business remained open.
  

• Operating Expenses: Payments for rent, mortgages, utilities, and other ongoing costs.
  

• Payroll Costs: Wages to keep employees on staff during closure.
  

• Relocation Expenses: Costs of temporarily moving operations.
  

• Extra Expenses: Additional costs incurred to minimize losses and resume operations.
  

Every policy is different, and carriers often interpret exclusions broadly to avoid payment. Our firm carefully reviews the language of your policy, the circumstances of your loss, and the full scope of damages to maximize your recovery.

COVID-19 and Beyond: Business Interruption in California

The COVID-19 pandemic highlighted the importance—and challenges—of business interruption coverage. Thousands of businesses across California filed claims, only to have insurers deny them under virus exclusions or argue that government shutdowns did not constitute “physical loss.”

While COVID-19 claims brought national attention to these disputes, business interruption coverage issues extend far beyond the pandemic. Fires, earthquakes, floods, and other disasters have long been sources of conflict between business owners and their insurers. Our firm has decades of experience handling complex insurance disputes and understands how to fight back against wrongful denials in every context.

Why Choose Timothy D. McGonigle

Insurance carriers are large, well-funded, and experienced in litigation. Business owners facing claim denials often feel powerless by comparison. Timothy levels the playing field.

With over four decades of litigation experience, Timothy has represented clients in some of California’s most complex insurance and commercial disputes. He knows the tactics carriers use to avoid payment, and he has built a career on forcing accountability through negotiation, litigation, and trial.

When you work with our firm, you get more than legal advice—you get a relentless advocate dedicated to securing the coverage and compensation you deserve.

Take the First Step

If your business interruption claim has been delayed, denied, or underpaid, don’t accept the insurer’s decision at face value. You have rights, and you may still be entitled to significant compensation.

👉 Contact our Los Angeles office today for a confidential consultation with a California business interruption lawyer. Let us review your policy, evaluate your claim, and fight to protect the future of your business.

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Frequently Asked Questions About Business Interruption Insurance

Q1: What is business interruption insurance?
Business interruption insurance helps cover lost income and extra expenses when your business is forced to close or reduce operations due to unexpected events, such as fire, water damage, natural disasters, or government-ordered shutdowns.

Q2: What losses are typically covered?
Coverage often includes lost revenue, payroll expenses, rent or mortgage payments, utilities, relocation costs, and extra expenses needed to get the business running again. Every policy is different, so coverage depends on your specific terms.

Q3: Why do insurance companies deny business interruption claims?
Carriers frequently deny claims by arguing that no “direct physical damage” occurred, that exclusions apply (such as for viruses or pandemics), or that losses are not properly documented. Many of these denials are wrongful and can be challenged.

Q4: Does business interruption insurance cover COVID-19 losses?
Many insurers have denied COVID-19 claims, citing virus exclusions or arguing that shutdowns don’t qualify as “physical loss.” However, courts continue to evaluate these issues, and some businesses may still have viable claims depending on their policy language.

Q5: How long does business interruption coverage last?
Coverage usually lasts until the business is restored to pre-loss conditions, subject to the limits of the policy. This period is called the “restoration period” and may be capped at a set number of months.

Q6: How do I prove my business losses?
Documentation is key. This includes financial statements, tax records, sales reports, payroll information, and receipts for additional expenses. Our firm works with experts to calculate and prove damages in detail.

Q7: What if my insurance company delays my claim?
Delays are a common tactic. California law requires insurers to handle claims fairly and promptly. Unreasonable delays may themselves be grounds for legal action under bad faith insurance law.

Q8: Can I sue my insurance company for denying my claim?
Yes. If your carrier wrongfully denies your business interruption claim, you may pursue litigation for breach of contract and, in some cases, insurance bad faith. This may entitle you to compensation beyond your policy benefits.

Q9: How long do I have to file a lawsuit for a denied claim?
The statute of limitations varies by policy and claim type, but most insurance disputes must be filed within two to four years. Acting quickly is critical to preserve your rights.

Q10: Do I need a lawyer to challenge a denial?
While it’s possible to appeal a denial on your own, insurance companies are far more responsive when an experienced attorney is involved. A lawyer ensures your claim is taken seriously and maximizes your chance of recovery.

Q11: Will hiring a lawyer make my insurer more likely to settle?
Yes. Insurers often take a tougher stance with unrepresented policyholders. When they know you have a skilled litigator prepared to take them to court, they are more likely to negotiate fairly.

Q12: How do I know if I have a strong business interruption case?
The best way is through a consultation. Timothy McGonigle will review your policy, evaluate your losses, and advise you on whether your claim has merit—and how best to fight a denial.