Covid-19 is a current global pandemic, declared so by the World Health Organization (WHO) in March 2020. Over 2 million people worldwide have tested positive for the virus that has killed over 140,000 of its’ victims. Here in the United States, many states’ governors have issued stay-at-home orders and mandatory non-essential business closures to help prevent the spread of the novel coronavirus that has infected nearly 700,000 Americans and led to over 30,000 deaths nationwide.
But Covid-19 is not only threatening the health and safety of citizens across America. The business closures initiated by government authorities are directly impacting people’s livelihoods and continued financial survival. Many business owners are struggling to keep their employees on payroll and maintain the ability to reopen their businesses when the orders are lifted. There is currently no timeline for how long these closures might last, and it varies by region.
As more and more people have been ordered to stay home to stay well and slow the spread of the viral intruder, businesses have also been forced to limit patrons’ access or close their doors altogether. As politicians, health experts and citizens struggle to formulate a plan to return life to its’ new normal, some business owners are grappling with the fact that the irreparable loss of income might see them in an impossible situation; unable to sustain a staff, recuperate lost inventory, or reopen at all.
Funding for specialty loans designed to help businesses fill this gap is already tapped out, leaving company owners little else to turn. An insurance payout might be their only saving grace. But it’s tricky. Some commercial policies contain exclusionary language blocking the recovery of losses caused by a virus. Additionally, many insurance companies will deny such claims as a matter of course, arguing that policies are intended to cover known or presently occurring calamities, because predicting such unknown threats is impossible and rates could not be determined accordingly.
But a knowledgeable attorney can help weather these battles for you. With our expertise in commercial insurance claims, we can determine the best and most efficient ways to fight for you and your business, securing you the payout you need and deserve. If you have business loss insurance coverage of any kind, you may be entitled to a claim as the result of the Covid-19 crisis; and we are waiting to assist you.
The stakes are high for both you and your insurer when filing any type of business insurance claim – especially now.
When it comes to saving your business—your livelihood; everything that you have worked so hard for—you might be emotional and tense going into it, knowing this might be your only shot to get back on your feet or to save yourself and your employees from joining the long line to unemployment. Insurance companies have much deeper pockets than their average customer, but they are often under pressure to keep rates low and preserve their leg-up with competitors by denying claims for compensation as a regular course of business. Sometimes, these denials are valid, or done in good faith. Other times, there may be something you or your insurer are overlooking.
An experienced attorney can help guide you through the rigorous process, rip away the red tape, and delve into the specific—yet oftentimes long winded and confusing—policy language to determine the fair payout you deserve. Depending on the policy language, you may have coverage for the following business losses:
This coverage is designed to do for the insured individual what the business would have done without the loss occurring. In other words, it covers actual business income losses suffered due to the necessary interruption or suspension of operations. Terms can vary from one policy to the next. But generally, the sustained losses must be the result of a covered cause of loss. If you can document your exact losses, you are more likely to have a successful claim with a speedy payout for this type of coverage.
This policy provision determines the application of the loss of business income coverage (BIC) due to the closing or restriction of access to a business by a government entity. If a government authority deems access to a certain business a public safety threat, they can limit or terminate all access to that business exposing it to financial havoc. If property damage is nonexistent, a business owner has this provision to rely on. It is basically an extended version of business interruption damages. But the loss of income must be caused—even proximally—by the civil authority’s order.
This is known as a contingent business loss, or a loss that is incurred due to losses or damages to a supplier or customer of your business. You do not have to have a supply contract with the impacted party to qualify for coverage under this claim. Additionally, an indirect loss might be triggered by the closure of another entity that typically frequents or patronages your business. This specific claim would fall under “leader property” coverage.
At least one lawsuit has already been filed on behalf of an insured restauranteur going head-to-head with their insurance company after their business interruption claim due to Covid-19 was denied. The case—styled Cajun Conti LLC, et al. v. Certain Underwriters at Lloyd’s, London, et al., No. 2020-02558 (La. Dist. Ct., Orleans Parish, complaint filed March 16, 2020) —could set the precedent for business owners across America that might soon have to defend their own claims against insurers turning down much-needed payouts.
According to the complaint, the restaurant owners were covered by an all-risks commercial policy. The policy did not contain any exclusions related to a viral pandemic and it specifically covered business losses due to a shutdown issued by a civil authority.
Government authorities can step in to guarantee that insurers are not unreasonably denying claims related to business interruption losses resulting from COVID-19. But the extent to which they will interfere is difficult to determine, as insurers might have access to legal rebuttals including challenges to the constitutionality of such forced payouts based on the Contracts Clause (U.S. Const. art. 1, § 10).
Members of Congress have already stated that providing coverage for such claims would “help sustain America’s businesses through these turbulent times, keep their doors open, and retain employees on the payroll.”
And President Donald Trump, himself, said in a recent press conference, “I would like to see the insurance companies pay if they need to pay…,” according to several media reports. Many business owners have been paying on these policies for many years for an occasion such as this one. And it is important that insurance companies are fair in deciding whether to pay on these claims.
One such draft bill in New Jersey (NJ Bill A-3844) was pulled from consideration before its presentation to the full assembly. But it was specifically aimed at helping small businesses, and even proposed to render null-and-void certain previous viral- or biological-related exclusions. A pivotal portion of the draft provision stated:
“Notwithstanding the provisions of any other law, rule or regulation to the contrary, every policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption in force in this State on the effective date of this act, shall be construed to include among the covered perils under that policy, coverage for business interruption due to global virus transmission or pandemic, as provided in the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103 of 2020 concerning the coronavirus disease 2019 pandemic.”
Although pulled before its passage, it is still a possibility that it could be brought back to the table. And other states might seek to influence insurers in the same way. New York is already requesting information from insurers regarding their commercial property insurance policies written and covering business establishments within the state, as well as details relating to business interruption coverage contained therein. This could be a precursor to the state taking additional action.
Do not attempt to take on yet another task on your own. Our attorneys are knowledgeable about commercial insurance claims involving business losses due to COVID-19. Let us help answer your questions and provide you with some certainty in these troubling times. Now is time best spent staying well and preparing yourself, your family, your employees, and your business for better days ahead.