San Diego Business Interruption Lawyer

Protecting Your Company When Coverage Is In Dispute

When operations grind to a halt, your business interruption insurance is supposed to provide a financial bridge. Yet many owners facing significant losses discover that getting paid is not straightforward. If you are dealing with delayed or denied business interruption claims in San Diego, it can feel like your insurer has all the leverage.

At The McClellan Law Firm, we represent companies whose financial stability is threatened by serious disruptions and coverage disputes. For more than 30 years, our firm has handled sophisticated business and insurance litigation in this region, including high-stakes commercial cases that turn on complex contracts and financial records.

Our trial lawyers have secured over 150 verdicts and settlements exceeding $1 million each. This track record reflects careful preparation, strategic thinking, and a willingness to litigate when necessary. If your business is facing a critical coverage fight, we are prepared to evaluate your policy, your losses, and your options.

Contact our firm today at (619) 215-1488 to schedule a consultation.

What is Business Interruption Insurance?

Business interruption insurance—also known as business income insurance—is typically included as part of a commercial property insurance policy. It is designed to replace lost income and cover certain operating expenses if your business is forced to temporarily close or reduce operations due to a covered event.

Unlike property insurance, which pays to repair or replace physical damage, business interruption insurance focuses on lost revenue and ongoing costs during the recovery period.

Policies vary widely, and the specific language in your contract determines what is covered. Unfortunately, insurance companies often interpret policy language narrowly to limit payouts. That’s where a San Diego business interruption lawyer can make a difference.

Common Ways Businesses Can Be Interrupted

Businesses in San Diego face a variety of risks that can disrupt operations. Some of the most common causes of business interruption claims include:

Natural Disasters

Southern California businesses may be affected by wildfires, earthquakes, flooding, or severe storms. Even if your building is not completely destroyed, smoke damage, structural damage, or unsafe conditions can force closure.

Fire Damage

Fires are one of the leading causes of business interruption claims. Even minor fires can result in extensive downtime due to repairs, inspections, and safety compliance requirements.

Government Shutdown Orders

Government-mandated closures—such as emergency health orders or safety evacuations—can severely impact revenue. Whether coverage applies depends on your policy’s specific language and any exclusions.

Supply Chain Disruptions

If a key supplier experiences damage and cannot deliver essential materials, your operations may grind to a halt. Some policies include contingent business interruption coverage for this type of loss.

Equipment Failure

Mechanical breakdowns or utility failures can halt production lines, restaurants, medical offices, and retail stores. Some policies require specific endorsements to cover equipment-related interruptions.

Losses Covered & Not Covered by Business Interruption Insurance

Understanding what your policy covers is critical. While every policy is different, business interruption insurance may cover:

Potentially Covered Losses

• Lost business income
• Fixed operating expenses (rent, utilities, payroll)
• Loan payments
• Taxes
• Temporary relocation costs
• Extra expenses to minimize downtime

The goal is to put your business in the financial position it would have been in if the interruption had not occurred.

Common Exclusions

Insurance companies often deny claims based on exclusions such as:

• Lack of “direct physical loss”
• Virus or pandemic exclusions
• Flood exclusions (if separate flood insurance is required)
• Utility service interruptions outside your property
• Poor documentation of losses

Insurers may also dispute the length of time your business reasonably needed to recover, significantly reducing the payout amount.

If you are unsure whether your losses should be covered, a San Diego business interruption attorney can review your policy and determine your legal options.

What Happens If My Claim is Denied?

Insurance companies deny business interruption claims for many reasons—some valid, many questionable. A denial does not necessarily mean you are out of options.

Common reasons for denial include:

• Claiming the event is not covered
• Alleging insufficient documentation
• Disputing the amount of lost income
• Interpreting policy language narrowly
• Arguing exclusions apply

If your claim has been denied, you may be able to:

• Appeal the decision internally
• Submit additional documentation
• File a formal dispute
• Pursue litigation for breach of contract or bad faith

In California, insurers have a legal duty to act in good faith. If they unreasonably delay, underpay, or deny your claim, they may be liable for additional damages beyond the policy limits.

At The McClellan Law Firm, we evaluate the insurer’s conduct and determine whether bad faith practices are involved.

The Importance of Acting Quickly

Business interruption claims are time-sensitive. Most policies require prompt notice of loss, and California law imposes certain deadlines for filing claims or lawsuits.

Delays can weaken your case or allow insurers to argue that losses were not properly documented. Working with a San Diego business interruption lawyer early in the process can help preserve critical evidence, including:

• Financial statements
• Tax returns
• Profit and loss reports
• Payroll records
• Lease agreements
• Vendor contracts

The stronger your documentation, the stronger your claim.

Business Interruption Claim FAQs

How long does business interruption coverage last?

Coverage typically lasts for the “period of restoration,” which is the time reasonably necessary to repair or replace damaged property. Policies may also include extended coverage for lost income after reopening.

Do I need physical damage to file a claim?

Many policies require “direct physical loss or damage.” However, what qualifies as physical damage is often disputed. An attorney can evaluate whether your situation meets the policy’s definition.

Can I recover future lost profits?

In some cases, yes. If your business suffered long-term financial harm due to the interruption, future lost profits may be recoverable.

What if the insurance company offers a low settlement?

You are not required to accept a low offer. An experienced San Diego business interruption lawyer can negotiate for a higher settlement or pursue litigation if necessary.

Why Businesses Turn To Our Firm

When a claim involves months or years of profit projections, industry-specific risks, and major insurers, you need more than routine claims handling. You need a team that treats your case as a significant business dispute. At The McClellan Law Firm, we purposely accept a limited number of active matters so we can devote meaningful time and resources to each client.

By keeping our caseload to about 15 cases at a time, we are able to focus closely on policy language, financial records, and the insurer’s communications. This approach is particularly important when a business interruption insurer is contesting coverage, disputing the amount of loss, or using technical policy arguments to avoid payment.

Our firm has obtained more than 150 verdicts and settlements over $1 million in complex cases. These results include sophisticated commercial disputes in which we worked through large volumes of contracts and detailed financial evidence. That experience informs how we approach large insurance claims and the leverage we bring to negotiations.

Founding partner Craig R. McClellan leads our team. He is a member of the Inner Circle of Advocates, a fellow of the American College of Trial Lawyers, and part of the American Board of Trial Advocates. These honors reflect decades of trying significant cases in courts here and across the country. For a business facing a major coverage dispute, it is reassuring to know that your business interruption attorney in San Diego is comfortable in the courtroom if litigation becomes necessary.

Call (619) 215-1488 to discuss your business interruption claims in San Diego with our team.