Business Interruption insurance and covid-19
This post was written at 9:00 a.m. on August 13, 2020. We believe that it was accurate and up to date as of that time. However, because of the rapid, daily changes in the political, business, and legal climates, we cannot guarantee the post’s currentness.
Businesses across the United States have been severely impacted by COVID-19 and now face a new hurdle in recovering revenues lost because of the pandemic as a result of Business Interruption Insurance claims being wrongfully denied by insurance companies.
Incidents of insurance companies declining businesses compensation for current and future losses are occurring in numerous states, and has now been taken to a national-level discussion. Lawyers representing business owners against their insurance providers across the nation have called for a single court to provide consistent rulings for all federal courts. However, the insurance companies believe a single court will delay hearings as states have different laws with regard to insurance policies and shutdown protocols.
There are three kinds of business coverage that are called into question by insurance companies as COVID-19 creates complications on numerous fronts:
Business Interruption (BI): Insurance coverage that replaces income lost in the event that business is halted due to direct physical loss or damage.
Dependent Properties Time Element Coverage: Time element property insurance that pays for the loss of income or an increase in expenses resulting from damage from a covered cause of loss to the premises of another organization on which the insured depends, such as a key supplier or customer.
Civil Authority Coverage Clause: An insurance policy provision that outlines how the loss of Business Income Coverage (BIC) applies when a government entity denies access to the insured property.
Many businesses believe they had coverage that would allow for a recovery; however, even when a government order prohibits or otherwise specifically restricts access to an insured premise, the policy may still require a nexus to a direct physical loss before triggering coverage.
Insurance companies and brokers are persuading their commercial clients from filing coronavirus-related BI claims because there is no physical damage to properties as a result of COVID-19. Unfortunately, there has been no clarification of this point from the class action lawsuits that are occurring. Businesses, attorneys, and insurance carriers will not know how to move forward until the U.S. Judicial Panel on Multidistrict Litigation makes a decision whether to consolidate all of the coronavirus business-interruption claims to one court for litigation, or to leave the cases at the state court level to decide the outcome.
Though most insurance carriers have taken the position that coronavirus-related Business Interruption claims will not be covered, our business litigation attorneys at Smith, Welch, Webb and White encourage our clients to gather evidence, notify their insurance company, and file an Business Interruption claim. There is a deadline requirement for first notice of loss (FNOL), and filing a claim will ensure you’re in a position to dispute the carrier’s denial of coverage at a later time.
Contact our attorneys at Smith, Welch, Webb and White today at 855-505-7999 if your insurance company has denied your business interruption claim and you feel the need to explore the options available to you to seek compensation.