Business Interruption Claims

Protecting Texas Businesses When Disaster Strikes

When a catastrophic event forces your business to close its doors or significantly reduce operations, the financial impact can be devastating and immediate. Business interruption insurance is designed to be the critical safety net that keeps your company afloat during these turbulent times, covering lost income, ongoing expenses, and necessary relocation costs. However, insurance companies frequently employ aggressive and deceptive tactics to delay, underpay, or outright deny these vital claims, prioritizing their corporate profit margins over your business’s survival. At Nixon Law PLLC, we understand that every single day your claim is delayed is another day your business’s future is in jeopardy. We aggressively represent Texas businesses in complex business interruption claims, holding insurance carriers accountable and fighting relentlessly to secure the full, fair compensation you are owed under your policy.

Understanding Business Interruption Coverage

Business interruption insurance, often included as a crucial component of a commercial property policy, is intended to compensate a business for the income lost during a “period of restoration” following a covered peril. In Texas, these perils frequently include devastating hurricanes, tornadoes, severe winter storms, fires, and explosions. This coverage is not just about replacing lost profits; it is fundamentally about ensuring the continuity of your operations and preventing a temporary setback from becoming a permanent closure. A comprehensive business interruption claim typically encompasses several key areas of financial loss:

Lost Net Income: This is the profit your business would have reasonably earned had the covered event not occurred. Calculating this requires a deep dive into historical financial records, tax returns, and projected earnings, often necessitating the expertise of forensic accountants to ensure accuracy.
Continuing Operating Expenses: These are the fixed costs that must be paid even when your operations are entirely suspended. This includes rent or commercial mortgage payments, property taxes, insurance premiums, essential payroll for key employees, and utility minimums.
Extra Expenses: These are the reasonable and necessary costs incurred to minimize the suspension of business and continue operations as quickly as possible. This might involve renting temporary office or warehouse space, expediting the shipping of replacement equipment, or outsourcing critical work to third-party vendors.
Civil Authority Coverage: This provides compensation for lost income when a government entity restricts access to your business premises due to physical damage at an adjacent or nearby property, even if your own property was not directly damaged.

Relevant Texas Law Governing Insurance Claims

In Texas, insurance companies are bound by strict statutory duties when handling commercial property and business interruption claims. When a carrier fails to uphold these obligations, Texas law provides powerful remedies for policyholders. At Nixon Law PLLC, we leverage these statutes to maximize your recovery and penalize insurers for bad faith conduct.

Texas Insurance Code Chapter 541 (Unfair Settlement Practices): This chapter strictly prohibits insurers from engaging in unfair or deceptive acts or practices in the business of insurance. It is a clear violation of Chapter 541 for an insurance company to misrepresent a material fact or policy provision, fail to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim where liability has become reasonably clear, or refuse to pay a claim without conducting a reasonable investigation. If an insurer violates these provisions, a business may be entitled to recover actual damages, attorney’s fees, and potentially treble (triple) damages if the insurer’s conduct was committed knowingly.

Texas Insurance Code Chapter 542 (Prompt Payment of Claims): Also known as the Texas Prompt Payment of Claims Act, Chapter 542 establishes strict, non-negotiable deadlines for insurance companies to acknowledge, investigate, and pay claims. Once a business submits all required documentation, the insurer generally has 15 business days to accept or reject the claim. If the insurer delays payment beyond the statutory deadlines, they can be held liable for the amount of the claim, plus interest at a rate of 18 percent per year as damages, along with reasonable attorney’s fees.

Texas Insurance Code Chapter 542A (Certain Actions Relating to First-Party Claims): This chapter applies specifically to first-party claims arising from damage to real property caused by forces of nature, such as wind, hail, or rain. It outlines specific pre-suit notice requirements that must be met before filing a lawsuit against an insurer. Navigating Chapter 542A requires precise legal strategy to ensure your rights are protected and that you remain eligible to recover attorney’s fees and statutory interest. Failure to strictly comply with these notice provisions can severely prejudice your case.

Common Scenarios Leading to Denied or Underpaid Claims

Insurance policies are complex, dense contracts drafted by the insurer’s legal team, often containing ambiguous language and hidden exclusions designed specifically to limit coverage. Texas businesses frequently encounter the following frustrating scenarios when filing business interruption claims:

Disputes Over the “Period of Restoration”: Insurers often argue that the business should have resumed operations much sooner than it actually did, prematurely cutting off the period for which lost income is calculated. They routinely ignore real-world supply chain disruptions, contractor delays, or the extensive time required to obtain necessary municipal permits for rebuilding.
Miscalculation of Lost Income: Forensic accountants hired by the insurance company frequently use flawed methodologies or selectively interpret financial data to minimize the projected lost profits. They may ignore seasonal trends, recent business growth, or upcoming lucrative contracts that were lost due to the interruption.
Denial Based on Lack of “Direct Physical Loss”: Insurers may deny a claim by arguing that the property did not sustain direct physical damage, a common and highly contested dispute in cases involving civil authority closures, power outages, or contamination.
Application of Unreasonable Exclusions: Carriers may attempt to apply exclusions that do not accurately reflect the true cause of the loss, such as categorizing wind-driven rain damage as an excluded flood event, or blaming pre-existing wear and tear for structural failures caused by a storm.
Unreasonable Delays and Endless Requests for Information: A common bad faith tactic is to subject the policyholder to a war of attrition, demanding exhaustive, repetitive, and irrelevant financial documentation to delay payment, exhaust the business owner, and force a lowball settlement out of sheer desperation.

How Nixon Law PLLC Helps Texas Businesses

When your business’s survival is on the line, you cannot afford to rely on an insurance adjuster whose primary loyalty is to their employer’s bottom line. You need an aggressive Texas trial attorney who understands the intricacies of commercial insurance policies and the underhanded tactics used by major carriers. At Nixon Law PLLC, led by Managing Attorney Jonathon G. Nixon, we provide formidable, uncompromising representation for businesses facing complex insurance disputes.

Our approach is rooted in meticulous preparation and an unwavering willingness to take cases to trial. We do not accept lowball settlement offers, and we are not intimidated by large insurance corporations. From the moment we take your case, we prepare for litigation. We collaborate with industry-leading experts, including independent forensic accountants, economists, and commercial property adjusters, to accurately quantify your business interruption losses and build an airtight, undeniable claim. We handle all communication and negotiation with the insurance company, shielding you from their aggressive tactics so you can focus your energy on rebuilding your business and supporting your employees.

If the insurance company refuses to honor their contractual obligations and pay the full, fair value of your claim, we will not hesitate to file suit and aggressively litigate your case in Texas courts. We hold insurers accountable for bad faith practices and fight to secure the maximum compensation available under the law, including statutory penalties and attorney’s fees. We are trial lawyers, and we are ready to take your fight to the courtroom.

Schedule a Consultation with a Texas Trial Attorney

If your business has suffered a covered loss and your business interruption claim has been denied, delayed, or severely underpaid, time is of the essence. Do not let the insurance company dictate the future of your enterprise or force you into bankruptcy. Contact Nixon Law PLLC today to schedule a consultation. We will thoroughly review your commercial property policy, evaluate the insurance company’s conduct, and develop a comprehensive, aggressive legal strategy to pursue the compensation your business desperately needs to recover and thrive. Let us fight the legal battles so you can get back to business.