by Scott A. Meyer
If your business has been impacted by COVID-19 measures, should you make a Business Interruption insurance claim?
Most common insurance policies’ business interruption coverage is only triggered if the
business interruption results from “direct physical loss or damage” such as from a tornado or fire. Unfortunately, most insurance carriers tend to deny claims that arise from pathogens or bacteria, and many include exclusionary language in this regard, so it is likely most would likely deny claims that arise from Covid-19 issues. Most policies also include coverage when “civil authority” prohibits access to a covered property. While the stay-at-home orders from most governing bodies should trigger this coverage, many insurance policies often tie this to physical damage to a nearby property, using that as an excuse to deny coverage.
However, on March 18, 2020, 18 members of Congress wrote an open letter to insurance industry leaders imploring them to recognize financial losses of insureds from Covid-19. On April 2, insurance industry executives responded by arguing for non-coverage and, instead, the creation of the Covid-19 Recovery Fund to be backed and funded by the federal government. President Trump then jumped into the mix and argued that insurance companies need to pay policy holders who have been “paying a lot of money for a lot of years for the privilege of having it.”
Throughout this back-and-forth, multiple states have proposed legislation that would require commercial property insurers to retroactively cover losses that insureds have accumulated because of the pandemic. While these bills have not yet become law and litigation from the insurance companies would likely ensue, one thing is certain: all policies contain language that if an insured fails to timely tender its claim, it loses its claim forever.
Filing a claim takes very little time or energy and preserves your rights for up to 10 years (depending on the statute of limitations period in your jurisdiction). Because we simply don’t know what legislators and courts will do going forward, we recommend that all businesses that have losses arguably tied to this pandemic file business interruption insurance claims if that coverage is part of applicable insurance policies.
Have questions about how to get your business through this crisis? Contact Scott Meyer at 469-916-7700 x115 or send an email via his bio page.
when it matters ™
About Scott A. Meyer
Scott Meyer focuses his practice on Corporate and Intellectual Property matters. His Corporate practice includes a broad spectrum of services including entity formation, business transactions, operational agreements and contracts, sales, acquisitions and mergers of businesses, corporate governance and employment matters.
His Intellectual Property practice includes trademark, licensing and various service agreements for corporations.Read more…