There have been a lot of reports in the press about the issue of business interruption insurance and whether COVID-19 related revenue losses are covered. Most health care providers and other businesses have all-risk business insurance policies that provide some business interruption coverage.
Most insurers have publicly stated that they believe that COVID-19 related revenue losses are not covered under standard business interruption coverage, and there have been many declinations of coverage issued already. The insurers are basing their denials on virus exclusions that may be included in some policies, or that business interruption coverage requires physical damage or loss to the premises, which the insurers contend is not present in the case of COVID-19. The insurers are also denying coverage even when there is a civil authority provision, which protects insureds from business losses when there are certain types of governmental closures.
In response, policy holders throughout the country have brought suit contending that COVID-19 has caused physical damage or loss to their premises, and that coverage is therefore required. There have also been challenges to the insurers’ failure to meaningfully inform insureds over the last few years regarding the adoption of virus exclusions.
It is too early to determine whether or not challenges to the insurers’ position will be successful or whether there ultimately will be business interruption coverage for COVID-19 related losses. Much will depend on judicial interpretations of the various policy provisions, and the facts concerning each business’ loss. There are also bills pending in Congress and various state legislatures that, if passed, would require coverage in most circumstances.
Given this environment, it is vitally important for all businesses to take steps now to maximize their chances of ultimately obtaining coverage. Failing to submit a claim or requested information to your carrier could result in the loss of any claim benefits. The steps are:
- Submit a business interruption claim to your insurance carrier, following the claim submission rules in your policy.
- Assemble and preserve all documents and other materials to support claim that COVID-19 related closure or limitations on operations caused decrease in revenue or profits, or an increase in expenses.
- Promptly respond to all requests for additional information or proofs of loss from insurance carrier.
- Save all correspondence from insurance carrier and broker.
We here at GW are available to assist businesses with the review of policies to evaluate coverage and prepare for denials.
Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].