Business and the Challenges of COVID-19
As the emerging COVID-19 pandemic continues to imperil the American people and disrupt daily life, the challenges it poses to businesses of all kinds continue to evolve as well. The full scope of these significant disruptions still can’t yet be known, but their impacts will be felt by both businesses closed by government order and those affected by quarantines, travel restrictions, slowdowns in the supply chain, and other causes of lost revenues both direct and indirect.
Many businesses, however, have insurance policies against natural disasters and other cataclysmic events. These policies or their riders are often known as business interruption insurance.
The personal injury lawyers at Boohoff Law, PA, can review your policy to see if you have purchased business interruption insurance. If so, we can help you file your claim and fight for the insurance you bought to cover you in an emergency like this.
Business Interruption Insurance
Business interruption insurance is usually purchased along with the policyholder’s commercial property insurance. Initially, the policies were more commonly used to protect against localized incidents, such as damage from weather or a fire, as well as theft, although recently policies have expanded to include broader business interruptions like cyber attacks. Just what exactly constitutes a physical loss continues to be a point of debate in courts across the nation.
In many cases, losses incurred during the coronavirus crisis are included. Often commercial property insurance policies include coverage for losses of income resulting when a civil authority prohibits or impairs access to a business.
California, Illinois, Washington, and several other states have ordered mandatory closures of businesses as wide-ranging as restaurants, bars, gyms, theaters, and performance venues, with more states certain to follow. The CDC is recommending “social isolation” periods of at least 15 days, with the strong possibility of an extension. The president on Monday urged citizens to limit themselves to gatherings of fewer than 10 even in home settings—a prohibitively small number for almost any business.
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The Coronavirus Outbreak and the History of Disaster
Business interruption insurance provides the policyholder with payments equal to the amount lost as the result of a peril covered by the policy. This can include not only the cost of property damage, but revenue lost during the course of restoration.
National-scale events such as the COVID-19 outbreak can result in massive insurance payouts. According to the Insurance Information Institute, in addition to the thousands of lives lost, the 9/11 attacks resulted in “at the time the largest cumulative claims payout in global insurance history” for property/casualty insurers and reinsurers. Hurricane Katrina would top that number in 2005, which set a new record for cumulative claims with $41 billion (in 2005 dollars).
These tragedies of earlier years were associated with more direct physical damage. But while the COVID-19 outbreak may not result in such physical destruction, it will make significant impacts—even if they are less acutely visible. This is where Boohoff Law, P.A., can prove invaluable in helping to understand the often confusing or more nebulous aspects of insurance law.
It is the job of the insurance company’s adjuster to pay as few claims as possible and as little on the claims that do remit. The adjuster works for the insurance company—they do not work for you.
Their strategy of denial, delay, and reduction in benefits can affect the benefits you paid for—and you deserve—in catastrophic events and natural emergencies like the current coronavirus epidemic.
Financial Struggles, Early Responses
Already business owners are meeting with resistance. WWL Channel 4 news is already reporting the first case of a company clashing with its insurance company over their interruption policy. The Oceana Grill, a restaurant in the French Quarter of New Orleans, is suing the U.K.-based insurer Lloyd’s of London.
At the same time, in London itself, U.K. pub owners Ei Group, which operates thousands of pubs, is already telling independent managers their own business interruption policies will not apply. Meanwhile, in New Jersey, the state legislature is considering Bill A-3844, which would force insurance providing business interruption coverage to include the effects of coronavirus in their policies.
Ask Boohoff Law’s Business Interruption Insurance Attorneys
Many business interruption policies include specific exceptions for losses incurred due to communicable disease outbreaks. The 2003 outbreak of Severe Acute Respiratory Syndrome (SARS) prompted some insurers to add these caveats, after the Hong Kong-based hotel chain Mandarin Oriental International Ltd. received a $16 million payout for losses attributed to cancellations as well as a reduction in food and beverage sales.
One potential factor in estimating the scope of coverable losses is known as the trigger date. Regardless of when losses or disruptions began, the insurer is only liable for damages suffered after the so-called trigger date, which is established by the CDC as the first day in which instances of a disease legally require reporting to the authorities. (For COVID-19, the date is January 8, 2020, well before most American businesses began to see direct disruptions.)
On the other hand, a federal court decision, Gregory Packing, Inc. v. Travelers Property Casualty Company of America, stated that “courts considering non-structural property damage claims have found that buildings rendered uninhabitable by dangerous gases or bacteria suffered direct physical loss or damage.” In other words, the direct contamination of a property by the coronavirus can trigger a valid property damage claim.
Not only that, but in Archer-Daniels-Midland Company v. Phoenix Assurance Co., another federal court found that supply-chain disruptions—if a store can’t open because the virus cuts off its supply of merchandise—and government shutdowns due to curfews, quarantines, and evacuation orders can constitute property damage in the form of contingent business interruptions.
Businesses still must quantify their losses, although not every business owner may fully understand what does and does not constitute a quantifiable loss as covered by their policies. That’s why anyone with potential claims on their business interruption insurance is advised to contact the business interruption insurance lawyers at Boohoff Law, PA, to review their case.
If you think you may have a claim against an insurance company for business interruption, or feel you might, whether due to the coronavirus or another disaster, Boohoff Law, P.A. will review your claim for free and represent you against the insurance company on a contingency fee basis. This means you will pay us nothing, and we will only collect a percentage of any settlement or judgment that we help you obtain. Call us now at (877) 999-9999 or write to us using our contact form.
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