Tourism plays a vital role in California’s economy. According to the Los Angeles Tourism & Convention Board, tourism generated a total economic impact of $36.6 billion in 2018 and supported 534,258 jobs in Los Angeles County alone. But while tourism generated a record economic impact in Los Angeles in 2018, 2020 is a much more difficult time for the industry.
In a typical year, tens of millions of people come to Los Angeles to visit places like Venice Beach, see the Hollywood sign, or attend a special event in the area. But as the coronavirus pandemic grew and numerous advisories were issued against unnecessary travel, the tourism industry took a massive hit. Disneyland and Universal Studios shut down, major events like Coachella were either cancelled or postponed, and thousands of people scrambled to cancel their scheduled hotel stays and flights.
When tourism is impacted by an event with the magnitude of the COVID-19 pandemic, hotels and airlines aren’t the only ones who feel its effects. It’s impacted major amusement parks, the tour companies that take visitors around town, and the souvenir shops in popular tourist destinations. With fewer people flying into the area, car rentals have taken a hit. Since travel agencies work on commission, cancelled vacations mean lost revenue.
Business Interruption Insurance for Travel Agents & Tour Companies
Given that Los Angeles is prone to certain types of events that can impact tourism, such as wildfires and earthquakes, business owners who rely on tourists typically plan ahead and prepare for those kinds of events. Very often, this means buying a business insurance policy that includes business interruption coverage.
If a business is forced to temporarily close its doors, business interruption insurance can help cover some of the costs associated with that closure, such as lost revenue, rent/mortgage payments, relocation fees, and employee payroll. In some cases, business owners buy insurance that includes civil authority coverage that can help when businesses are forced to temporarily close because of a government order.
But as the travel industry faces growing losses because of the COVID-19 pandemic, insurance companies are very eager to deny claims for business interruption benefits. A big thing they’re trying to argue is that business interruption claims require a type of physical damage to a business and that coronavirus doesn’t count. Claims for policies that include civil authority coverage are also frequently being denied because the government order wasn’t issued due to physical damage near a business.
What to Do if Your Business Interruption Claim is Denied
Right now, insurance carriers are taking a very broad approach to denying business interruption claims and even qualified claims have been denied. The coronavirus pandemic isn’t the first time insurance carriers have tried to avoid responsibility for claims caused by epidemics. For example, in 2016, the Insurance Information Institute argued that business interruption insurance should not apply to businesses who faced losses caused by reduced tourism due to the Zika virus.
But with the massive global impact of coronavirus, insurance carriers are facing more pressure to cover these claims than they did during the Zika outbreak. Several lawsuits have already been filed against insurance companies and bills have been introduced in some states to force insurance companies to cover these losses.
If you’ve made a claim and been denied or are getting ready to make a claim, getting help from a lawyer can give you the best chance for a successful claim. At The Wallace Firm, we fully understand how important tourism is to California’s economy and we want to help businesses owners in the travel industry get back on their feet. When you work with us, you’ll be able to get help from a lawyer experienced in dealing with insurance companies. Contact us today for a free case evaluation.