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short note on claiming business losses

                                    CLAIM BUSINESS LOSSES

  • There are many insurance companies that provide Business Interruption Insurance also known as Business Income Insurance. 

  • Business Interruption Insurance is a insurance policy provided by the insurance company to the business on the account of any unforeseeable event that causes damage to the business

  • There are 3 types of commercial insurance, are

  1. That protects against the loss of income

  2. That a business suffers as a result of a covered peril 

  3. That triggers a suspension of its activity

  • The issue that arise today is the disruption caused by the COVID19 that is not mention expressly in any clause of the insurance policy.

  • Insurance companies also plea that loss suffered in connection with Covid19 not covered in the insurance policy and such losses of business income must be direct cause of physical damage of property

  • There are some cases where Insurance Companies excludes losses in connection with virus which eliminate coverage for some type of risk & narrow the scope of coverage provided by the insurance agreement.

  • In order to claim damages from the Insurance company on the disruption of business due to Covid19 analysis of insurance policy, go thorough all the terms carefully to determine how coverage would impact any given loss situation.

  • Look for key terms that cover in your insurance policy like storm, Hurricane, Tornado, Earth quack, Fire, Explosion, Flood, etc. if policy cover so, then Covid19 pandemic being of same general nature or class as those enumerated is included rather than excluded. All these involve substantial damage to property, Hardship, Suffering, or possible loss of life.

  • The Government of India impose national lockdown considering Covid19 as a disaster under Disaster Management Act, 2005.  

  • The Supreme Court of Pennsylvania in the case of De Vito V. Wolf (2020) challenge the Lockdown imposed at national level. National lockdown impose under emergency provision considering the Covid19 pandemic as a disaster. 

  • Damage indicates some injury which is not necessarily physical but may loss of use. 

  • There are provision regarding contingent Business Interruption coverage in which businesses are unable to operate because of an event/damage in the business premises of one of its supplier or consumer, 

  • Look for provision that covers for loss due to Denial of Access Provision the element for coverage.

  • It is mandatory to send notice to the insurance company about the losses occurred to your business. IRDAI also advised not to reject claim without ascertaining the reason and recording the same. 

  • In the case of Shree Bank V. S.D. Roy & CO. (1953) private bank fail due to period limitation due to which depositor suffer loses. Government implement Banking Regulation in order to increase period of limitation in retrospective effect. 

  • In the case of Mithilesh Kumari V.  Prem Behari Khare (1989) parliament has jurisdiction to pass a declaration legislation law for the benefit of individual & community as a whole. 

  • In the case of JP Bansal V. State of Rajasthan (2001) the court held that when there is no ambiguity & words are clearly express & intention of legislation there is no scope to innovate with the provision.

  • In the case of Union of India V. Unicorn Industries (2019) Supreme Court held that parliament cannot withdraw benefits after huge investment of the investor in the business for the welfare of the people.
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