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Business Interruption Insurance Claims in Texas

Below is how business interruption insurance claims work in Texas:

  1. A business submits a claim to the insurer. The claims should contain a list of all losses and damages caused by a named peril in the policy document

  2. The insurer will examine the claims

  3. Business revenues and operating expenses, such as salaries, are what business interruption covers. Once an insurer verifies a claim, it will begin making payments according to the claimant’s documented revenues and expense sheet

  4. Payments begin 24 to 72 hours after claims have been authenticated

Discuss your business interruption claim with a Texas commercial insurance agent.

How Do I File a Claim for Business Interruption Insurance?

The authorized representatives of an insured Texas business should contact their insurer or the insurance agent through whom they purchased a policy to file a claim for business interruption. The policy agent can be beneficial in ensuring that the claims filing process goes smoothly. The agent will typically be tasked with:

  • Examining and reviewing the existing policy to check if the peril that caused an interruption is covered,

  • Assists the business in compiling evidence and communicating with the insurance company, and

  • Filing all paperwork regarding the claims on behalf of the insured business

If an insured business got its interruption insurance coverage directly from the insurer, it will need to resolve the claim by calling the insurer and speaking with the staff (captive) agent, who will start the process for you.

How Long Do I Have to File a Business Interruption Insurance Claim in Texas?

An insured business in Texas should file a business interruption claim immediately after a covered event. Business interruption insurers must highlight every detail of an insurance policy in the policy documents offered to their clients. In addition, a business is guaranteed full disclosure of its responsibilities while the policy is in force. An insurer is expected to clearly state the time window a business has to file claims in the policy document.

What Happens after I File a Claim with my Business Interruption Insurance Company in Texas?

In business interruption insurance there is no regular deductible, instead there is a Waiting Period before the coverage begins. During this period the business is supposed to operate using its existing savings. A waiting period not exceeding 72 hours kicks in upon filing a business interruption insurance claim in Texas. In this period, the insurer will examine filed claims and is expected to pay out within 24 to 72 hours after the events leading up to business interruption.

How Do Business Interruption Insurance Companies Pay Out Claims in Texas?

Once the waiting period deductible of your business interruption insurance has elapsed, your insurer will make payments via the methods stipulated in your insurance policy document. Usually, this will be an Automated Clearing House (ACH) transfer or a check. The payout will be the cost of repairs minus the deductible. For example, if the interruption of operations costs the business $10,000 per day, it could be on the hook for $30,000 out of pocket, before the insurer will start covering the loss - if it chose the cheaper 72 hour waiting period. .

Can a Business Interruption Insurance Company Refuse to Pay a Claim?

Yes, if a business interruption insurance provider in Texas suspects fraud, they can refuse to pay a claim.

Why Do Business Interruption Insurance Companies Deny Insurance Claims?

BI insurance is essentially a loss of income insurance. Thus if claims are not based on covered events that cause the business to lose income the claims will be denied. Also, a business interruption insurance provider in Texas can deny insurance claims if it suspects fraud. If the business files a claim with damages not covered in the policy contract, the insurer will also turn it down. Additionally, If a business that pays its BI insurance premiums without premium financing has stopped paying insurance premiums, the insurer can deny filed claims.

How Much Does Business Interruption Insurance Pay Out?

The amount business interruption insurance pays out is determined by the amount necessary to provide business income insurance coverage after a covered event. BI Insurance is also a business continuity insurance since the policy provides business income coverage to cover for income lost during a crisis that prevents a business from operating as it should. So, it will pay out enough to cover employee wages, operating expenses, loan payments, taxes, and profits that would have been made if there were no interruption ensuring continuity in the business. The coverage lasts until the business interruption period is over.

What if my Business Interruption Insurance isn’t Paying Enough for my Claim?

Business interruption insurance is a business continuation insurance in the event of a loss. Thus, it is unlikely that business interruption insurance in Texas will not pay enough for a claim because payments are made in line with financial records provided by a business to its insurer and the government via tax filings and other documents. Hence, business interruption insurance will pay enough for a claim if the filings and the record-keeping process accurately depict the business income. However, if payments received from an insurer are not enough to cover claims, the business’s licensed insurance agent can engage the insurer further for redress.

Business interruption insurance may seem like it is not paying enough due to the chosen waiting period. The longer the waiting period, the less you will get paid by the insurer.

How Long Can a Business Interruption Insurance Company Investigate a Claim in Texas?

Before a business interruption insurance provider extends coverage to a business in Texas, they will thoroughly investigate its financial statements to determine the income and expenditure. After this, the business can start paying the agreed insurance premiums. Business interruption insurance providers do not engage in thorough investigations to determine the value of claims since they understand the financial position of the businesses they have insured. However, there is a standard waiting period of between 24 to 72 hours before the insurance provider will pay out claims. If you want to get paid faster, you need to select the shorter waiting period deductible.

How Can I Check the Status of my Business Interruption Insurance Claim?

To check the status of a business interruption insurance claim in Texas, the representatives of the insured business can do two things:

  • First, consult with their licensed commercial insurance agent who helped file the claim to determine their status

  • Reach out to the insurer's claims department to find out the status of such a claim. This can usually be done via a dedicated phone line, website, or mobile app

When not to File a Business Interruption Insurance Claim?

Generally, a business should not file a business interruption claim in Texas under the following circumstances:

  1. If the damage to your business does not affect the income-earning ability of the business

  2. If the business interruption insurance policy does not cover the event leading to the interruption of operations

The representatives of an insured business can discuss business interruption claim-related issues with their insurer, commercial insurance agent, or an attorney practicing insurance law.