Business Interruption Claims Caused by Injury: What Business Owners Need to Know

When an Injury Closes Your Business

A slip-and-fall at your commercial property, a workplace injury that shuts down operations, or a fire caused by a third party's negligence — these events can force a business to close temporarily or permanently. If you carry business interruption (BI) coverage, your policy may reimburse lost income and continuing expenses during the closure.

Understanding how BI insurance works and where claims break down can mean the difference between recovering and going under.

What Business Interruption Insurance Covers

Standard BI coverage replaces net income the business would have earned during the period of restoration, plus continuing fixed expenses such as rent, payroll, and utilities. Coverage is typically triggered by direct physical loss or damage to covered property from a covered peril.

Additional coverages sometimes included are: - Extra expense: Costs above normal operations needed to continue business (temporary location, equipment rental) - Contingent BI: Losses caused by damage to a key supplier's or customer's property - Civil authority: Losses from government-ordered closures due to nearby property damage

Why BI Claims Are Often Denied

No physical damage. Insurers frequently deny BI claims that arise from injury liability closures, arguing there was no physical damage to the property. Courts have split on this issue.

Period of restoration disputes. Insurers may argue the business could have reopened sooner, limiting the covered period artificially.

Documentation gaps. BI claims require detailed financial records — tax returns, profit and loss statements, payroll records. Businesses with informal bookkeeping often struggle to substantiate losses.

Policy exclusions. Communicable disease, government action, and utility interruption exclusions can bar coverage depending on the circumstances.

Pursuing a Third-Party Claim

If the interruption was caused by a third party's negligence — a fire set by a contractor, a customer injured because of a defective product installed by someone else — you may have a direct negligence or products liability claim against that party. Lost business income is a recoverable economic damage in most personal injury frameworks.

Building Your BI Claim

Start documenting immediately: daily revenue comparisons, employee hours, supplier invoices, and communications with contractors overseeing repairs. Engage a forensic accountant early if losses are substantial. Most BI claims involve contested calculations, and professional documentation gives you far more leverage.

Consult with both a business attorney and an insurance coverage attorney if the claim is large or contested.