When you bought your business interruption insurance, you expected it to cover any losses your small business incurred if some kind of disaster ever forced you to close your doors. 

So, now that a disaster has actually happened, why is your insurer denying coverage? Orders from the government have forced many small business owners to halt their operations in the interest of public safety — but insurance companies aren’t paying out. 

Why not? Essentially, it comes down to this: Many business insurance policies are tied to events like fires, floods, earthquakes and other catastrophes that cause significant damage to business property, not just business operations. Insurance companies are largely saying that it takes that kind of physical damage to trigger the policy. Without it, they don’t have to pay.

Companies who have been required to temporarily close their businesses due to recent events are finding out about the exclusions the hard way. One denied claim here in New Jersey read, in part, “Unfortunately, there is no business coverage for this situation nor is there any coverage for purchase at this time. The coverage trigger for business income and extra expense coverage is direct damage to property at an insured location by a covered cause of loss.” 

It’s a situation that has left small business owners both in this state and around the nation reeling as if they’d just received “a punch in the gut.” Numerous states, including New Jersey, have already begun drafting bills that would force insurers to cover events when the business owner is required to halt operations by official orders, and class action lawsuits are already forming — but it’s likely to be a protracted legal battle for many.

If you’re a business owner who has recently been forced to close, what can you do to help your situation right now? First, the experts say that you should file your insurance claim — even if you fully expect it to be denied. This gives you a starting point to launch a fight (and can help you stave off creditors for a while). Then, you should start shopping for new insurance with broader inclusions or riders that will protect you in the future. 

Finally, seek experienced legal assistance. An initial denial isn’t the end of your claim — and it shouldn’t be the end of your business or dreams, either.