In an article by Zenger News, Culhane Meadows’ Chicago office partner Daniel Struck explores insurance coverage for small businesses in the face of violent protests.
Here are a few excerpts from Dan’s interview:
Mike and Carolyn Deininger learned the hard way that insurance doesn’t usually make small business owners whole following politically inspired violence.
The Cincinnati-based gift store owners’ experience reveals vital lessons for managers and the interplay between politics and insurance. The Deiningers’ difficulties may also be instructive to mayors and governors, who oversee police and insurers.
Sitting at home on July 30, 2020, the Deiningers received a text from a good friend around midnight. Their store had appeared on television and the news wasn’t good.
“She said, ‘There’s rioting; it looks bad,’” Carolyn said. “Right after that, we started getting texts, emails. The alarms went off.” People had smashed glass and broken into the store.
Almost all their windows were broken and a handful of items stolen, requiring a full week of cleanup. Good insurance and a grant that covered the deductible helped.
“We would have been out about $20,000 to $25,000, which is a lot for us,” she added.
Many small businesses that have seen damage and looting over the past months were likely not so fortunate. The limitations of insurance, potential fights with insurers and the reality of trying to rebuild and reestablish operations have become major hardships. Financial pressures pushed some to drop coverage entirely.
People who assume insurance companies will make every business owner whole are wrong. And the Deiningers aren’t the only business owners dealing with riots or looting.
An insurance company’s primary mission isn’t paying claims. If a building burnt down with all the receipts for inventory and fixtures, the owner won’t have proof of his losses—which an insurer will insist on seeing.
Business interruption insurance also leaves open the question of how losses are valued.
“The way an income claim is established is to look at prior periods of the business to see what the lost business is,” said Daniel Struck, a partner in the Chicago office of law firm Culhane Meadows. “An insurance company might make the argument, ‘Let’s look at the last three months when you were closed.’ It’s harder for a small business to argue against an insurer if the insurer is taking an adverse coverage decision. It costs money to do so.” That’s money the business likely doesn’t have, especially if the Covid-19 pandemic shut it down for months.
The complete article can be found here.
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