The COVID-19 crisis is impacting businesses small and large across the country with virtually none spared. If you are not deemed an essential business, you’ve probably suspended or, at best, greatly reduced your operations over these last few weeks. In that case, you may be looking to the Business Interruption coverage under your property insurance for help. Hurwitz & Fine has been tracking legislative initiatives and the dozens of lawsuits that have already been filed by policyholders seeking Business Interruption coverage. Below we highlight a few takeaways from these recent developments.
Read Your Policy Carefully
As you may be aware, the consensus among insurance carriers is that slowdowns and shutdowns due to COVID-19 are not covered under a typical property insurance policy. Many carriers have already denied claims or posted information on their websites stating that COVID-19 is not property damage, which is regularly required to invoke Business Interruption coverage. We caution; you must read your policy. Different carriers use different forms, with different terms and exclusions. Insurance is not one size fits all. For example, some carriers include exclusions for any loss resulting from a virus, but others do not. Read your policy carefully, consult with your broker, consider submitting a claim if the circumstances may justify it or call a member of our COVID-19 insurance team and we can assist you in evaluating your policy’s coverage.
COVID-19 Insurance Legislation
The Hurwitz & Fine Coverage Team has prepared a consolidated resource document comprised of legislative summaries for all proposed state and federal legislation to date concerning COVID-19 business interruption coverage. To download our consolidated summaries, click here. Looking at these materials may help you to think about your unique circumstances. Legislatively, seven states, including New York, and some members of Congress have proposed laws that would require insurance companies to pay policyholders’ Business Interruption claims, regardless of the policy terms. These ideas have received quite a bit of opposition and none of the bills have been moved to a vote.
Not waiting for legislative help, there are now almost three dozen lawsuits, and growing exponentially by the day, by policyholders suing insurance companies demanding coverage for business income loss due to COVID-19. Some of these lawsuits are even styled as national class actions. Check to see if one of these is against your carrier. These lawsuits canvas the country but we’ve discerned a few commonalities. First, the plaintiffs describe themselves as non-essential businesses. Second, the business mostly had “all risk” property policies. Third, the businesses sustained almost complete if not total impact on their operations as a result of local and state social-distancing and stay-at home orders. And, fourth, almost all allege that COVID-19 caused property damage, some under the “fomite formation” theory.
Hurwitz & Fine continues to monitor and analyze the legal and legislative initiatives surrounding these issues and provide regular updates to our clients. Please contact any member of the firm’s Labor & Employment Group or our Insurance Coverage Team for guidance.