Do you understand your insurance policies?
When the Covid-19 pandemic forced the closure of millions of businesses, many sought relief by making claims. Many claims were on their business interruption insurance coverage on their policies. They were quickly denied.
Insurance Denial
Gavrilides Management Company, owners of the Soup Spoon Café and The Bistro, refused to accept its insurer Michigan Insurance’s denial. They went to court to force payment of revenue lost during the lockdown. Unfortunately, the court granted Michigan Insurance’s motion for dismissal of the case.
Coverage
The court ruled that coverage under the policy is provided for actual loss of business income sustained while operations are suspended. Furthermore, the suspension must be caused by the direct physical loss of, or damage to, the property. The judge also stated that the loss must be “something with material existence… that alters the physical integrity of the property.” This shows how much the wording of all these policies matter. Both parties agreed that Covid-19 did not actually entered the property and the shutdown was due to governmental action. Since the cause of the financial loss actually was loss of access to the property not caused by physical damage, the policy coverage did not apply.
Policies Written By Insurance Companies
Remember, insurance policies are written BY insurance companies. FOR insurance companies. Your signature on the policy means that you read it. And understood it. Unless the policy provisions are written are against the law, against “public policy” or ruled ambiguous, the court will rule in favor of the insurance carrier.
Understanding insurance policies is crucial for making informed decisions and ensuring you’re properly protected in the event of an accident, injury, or loss. Insurance policies are legal contracts that outline what is covered, what is excluded, and the steps you must follow to file a claim. Key elements include the premium (what you pay), the deductible (what you pay out of pocket before coverage begins), and the coverage limits (the maximum amount the insurer will pay). Without a clear understanding of these components, policyholders risk underinsuring themselves or being caught off guard by unexpected expenses during a crisis.
Reading the fine print is essential, as insurance policies often contain complex language and exclusions that can affect your coverage. For example, a homeowner’s policy might not cover flood damage, or an auto policy might not include rental car reimbursement unless added separately. It’s important to ask questions, compare different policy options, and clarify any ambiguous terms with your insurance provider or a trusted advisor. Knowing exactly what your policy covers—and what it doesn’t—can prevent delays or denials when you need support the most.
In addition to understanding your current coverage, it’s wise to review your policies regularly, especially after major life changes such as marriage, purchasing a home, or starting a business. Your insurance needs can evolve, and updating your policies ensures that you remain adequately protected. Being proactive about understanding your insurance not only provides peace of mind but also empowers you to make smarter financial decisions, avoid costly surprises, and confidently navigate any claims process that may arise.
Taking the time to fully understand your insurance policies can make all the difference when unexpected events occur, ensuring you’re prepared and protected when it matters most.
Our Team Can Help You
If you have questions about your policy coverage, please review it with your attorney before you find out you need it. Rosenberg Law specializes in helping clients review their policies. We make sure to help you understand exactly what all that insurance lingo means. Rosenberg Law is dedicated to compassion, integrity, and results. Check out our insurance policy review page.
Recent Comments