As everyone is struggling to make sense of the COVID-19 situation in the United States, one group that is particularly straitened are the owners of small and medium businesses.
With local, state and federal ordinances emphasizing social distancing and stay-at-home orders in force, businesses are finding themselves without customers and no way of knowing when income can resume Is.
These slowdowns, and in some cases complete shutdowns, have left many business owners wondering: Can my insurance policy provide coverage for my losses related to business interruption? Read on to learn more from Covid-19 business interruption insurance attorneys. Dolman Law Group Accident Injury Lawyers, PA
Does business interruption insurance cover COVID19?
Business interruption insurance (also known as business income insurance) is a type of insurance policy designed to cover commercial properties that lose income due to recession or the cessation of its operations.
In most cases, business interruption insurance also provides coverage for lost income due to shutdown due to an order from a civil authority, depending on how the business is directly affected by the government order.
What coverage is provided under property insurance policies?
Most businesses' property insurance policies cover property damage, as might very well be expected, but they also provide coverage for loss of profit resulting from that damage. This lost income coverage often covers:
Losses caused by damage to business property.
Losses resulting from damage to the business's customers or suppliers.
Damage caused by a government order, such as a hurricane evacuation.
Loss from damage to another property that attracts customers to the business, like a large grocery store in a shopping center.
In the insurance industry, a "coverage trigger" is an event that must occur for an insurance liability policy to apply to a loss.
In the case of property insurance loss discussed here, the event that triggers any of the above coverage is property damage.
The general purpose of this coverage is to reimburse the policyholder for any lost benefits and costs that arise during the period of interruption and resume after the interruption.
However, without property damage, property insurance typically does not provide coverage for lost profits.
And that's the fundamental question here. Does a government order to shut down your business qualify as a coverage-triggering event so that the business can recover lost profits? Similarly, does the mere presence (or potential presence) of COVID-19 inside a business count as property damage?
Coronavirus as "non-structural" property damage
Of course, the coronavirus does not cause any permanent physical damage to a business's property, but it can potentially occur on all surfaces of a business, such as in restaurants, by customers and employees.
By touching surfaces or through the air. Does this qualify as non-structural property damage that has disrupted the businesses income?
In the past, some courts have found that the presence of harmful substances in or on a business does, in fact, qualify as a triggering event for property damage coverage.
a specific case,a federal court in New Jersey found that a liability insurance company was required to provide property damage coverage after ammonia was accidentally released at the facility, causing the plant to shut down.
The reason for his ruling was that a business could sustain a loss without altering its asset structure. Similar cases have been successful in other states.
It provides a good rationale for loss of property due to COVID-19 and thus coverage for loss of business during the pandemic.
This situation, specifically relating to the coronavirus, has yet to be determined definitively, as no case has yet been fully tried. But one small business wasted no time in starting the process.
First 'Business Interruption Lawsuit' Related to COVID-19 Filed in
New Orleans A New Orleans restaurant, Oceana Grill, has filed a lawsuit to secure insurance coverage for its business interruption losses due to COVID-19In this case The plaintiffs are seeking confirmation from the courts that their insurance company will provide coverage for damages caused by government ordinances and costs associated with cleaning up businesses from the virus.
Plaintiffs claim that the policy was an "all-risks policy" and did not include any exclusions. The courts have not yet decided on this matter.
Will the government force insurers to cover losses caused by COVID-19?
Some states have already started the process of ensuring that businesses in their state will be covered for loss of income caused by the coronavirus.
In March 2020, members of the House of Representatives wrote a letter to four major insurance organizations asking them to cover claims for obstruction resulting from COVID-19.
House members wrote letters to The American Property and Casualty Insurance Association, The National Association of Mutual Insurance Companies, The Independent Insurance Agents and Brokers of America, and The Council of Insurance Agents and Brokers.
In the request, House members made a case for business interruption insurance covering income loss from the virus pandemic.
He focused on the positive outcomes that could come from insurance companies covering these losses, including keeping businesses open and paying employees.
As of the writing of this article, some CEOs have already responded, and their responses are not surprising.
with the business interruption insurance policy be providing coverage against conditions like COVID-19 remains to
Representatives will go aheadHowever, we've also seen some states begin to act.
New Jersey introduced a bill that seeks to help businesses affected by COVID-19.
The Bill states that insurance companies, assuming nothing otherwise, must cover losses related to business interruption due to a global pandemic.
Of course, the bill only covers those businesses in New Jersey, but it sets an interesting precedent that we'll be monitoring closely.
New York has not introduced a similar piece of legislation, but New York's Department of Financial Services issued a statement requiring insurers to provide details about business interruption coverage to them and to policyholders. It's possible they intended to build something similar to New Jersey.
No state has passed anything into law yet.
Can I Sue for Loss of Income from the COVID-19 Shutdown?
At Dolman Law Group Accident Injury Lawyers, PA, we are closely following the coronavirus pandemic and its effects on the laws, the courts, and our communities.
In the case of a business losing income as a result of a coronavirus shutdown, it remains to be determined whether business interruption insurance or commercial property insurance coverage will be provided. In the past, insurance companies have struggled to stop providing coverage for similar conditions.
But in reality this has never been the case; This is clearly an unprecedented moment in history.
We will continue to follow the above cases and bills to see how they develop. We will continue to provide updates as they become available.
If you have any questions about your business regarding COVID-19, or are concerned about coronavirus negligence, feel free to contact the attorneys at Dolman Law Group Accident Injury Lawyers, PA.