There is a fight brewing between businesses and insurance carriers over loss of business interruption claims caused by the novel coronavirus (COVID-19). Businesses believe that insurance companies should pay business interruption claims. Insurance companies believe that pandemics like COVID-19 are excluded from coverage under the insurance policy.
Businesses usually have a general liability insurance policy that provides coverage for multiple events like someone getting injured or, in this case, a business having to close down due to an unforeseen event like damage to the business’s location or to its computer systems. Businesses pay their insurance premiums and expect the insurance to be there when they need it. Most businesses do not realize that there are many exclusions to their insurance coverage that are buried in the insurance policies. One common exclusion is an exclusion for pandemics oftentimes called a bacteria and virus exclusion. That exclusion either completely bars any claim for business lost to a virus like COVID-19 or puts a small cap on the amount that can be recovered. That cap likely only covers a week or less of most businesses’ operations.
Many businesses are surprised to find that their claims for lost business are now being denied under these claims. Insurance companies say they cannot pay the claims because it will bankrupt their industry. However, due to the number of businesses that are being affected by COVID-19, the government is considering requiring insurance companies to pay the claims anyway even if there is an exclusion in the policy.
According to the Wall Street Journal article Restaurants vs. Insurers Shapes Up as Main Event in D.C. Lobbying Fight, the restaurant lobby is leading the charge to get the government to force the insurance companies to pay the claims. The insurance companies must be feeling the pressure to do this because they are now apparently asking the government to set aside a fund to reimburse them for the claims they have to pay. That is good news for South Florida businesses that are looking to make loss of business interruption claims.
Another event that occurred that may help loss of business interruption claims in Miami, Broward, and Palm Beach is that the local government issued stay at home orders. Some insurance policies with loss of business interruption claims require the business to be lost due to a particular event like loss of power, flooding, or a government order. Here, the government required all non-essential businesses to close, so that event will likely trigger at least some loss of business interruption policies.
However, there is still a practical problem even though a government stay at home order was issued in South Florida and the government is considering ways to require insurance companies to cover the loss of business interruption claims. Insurance companies rarely are in the business of willingly paying claims, even ones potentially backed by the federal government. They will likely fight you on the claim itself and the amount of the claim.
Here are some issues you need to pay attention to if you are going to try to bring a claim for loss of business interruption for COVID-19:
- You need to consider whether there is language in your insurance policy that excludes or limits the claims. Even if there is such language, you may be able to force the insurance company to pay.
- You need to consider whether there is a requirement in the insurance policy that you give notice to the insurance company of the claim. There is usually a limited amount of time that you have to give notice or your claim can be barred.
- You need to keep records about your business’s income and expenses for the preceding year at least. If you businesses is seasonal in Miami, then you may need records from a couple of the earlier season. You will also need records showing your current income and expenses so you can show the difference.
- When it comes time to make your claim, you will want to present it in such a way that it is covered by the insurance policy or any government program covering loss of business interruption claims. That requires a careful reading and interpretation of your insurance policy, which is often hundreds of pages of legal language. The unfair business practices attorneys at Mase Mebane & Briggs have decades of experience handling these complex matters. If you believe you may have a claim, contact us for a free case evaluation.
Overall, the issue of whether business interruption claims will be covered continues to evolve. However, if it becomes anything like the Payment Protection Program under the CARES ACT, any money set aside by the insurance companies and government to cover these claims may go fast. You will want to be prepared to act as soon as possible if a way opens up to make claims under for loss of business. We can help you analyze your position and be prepared to make the claim when the time is right.