- The first place to look is the insuring agreement.
- The type of coverage matters: first party coverage means the insurance company pays you for loss, as opposed to third party coverage, which defends and indemnifies you against loss by a third party.
- Facts are critical, including:
- Did an event occur that is covered under the insuring agreement?
- Is there an exclusion that could cause the insurer to deny your claim?
- Business interruption coverage typically requires “direct physical loss or damage.”
- A possible argument could be made that “damage” occurred due to contamination of the workplace or property if the virus was actually present and caused a shutdown of business, but that could be difficult to prove.
- Actuarial reality of a viral pandemic prevents standardized coverage for all virus-related claims, otherwise entire insurance industry would falter.
- Some policies may have a communicable disease extension that could provide coverage, and if you contemplated this type of loss and purchased available insurance for it, then the language in your policy should reflect that; however, it is not a standard provision.
- Some other places to look for coverage include:
- Civil authority mandate (potentially related to shelter in place orders, but broad definitions of “essential” business could be grounds to exclude coverage).
- Impairment of ingress and egress (based on a shelter in place government order).
- Supply chain interruption (provided that you are damaged, not just your supplier.
- However, keep in mind that policies typically require “direct physical loss or damage” in order to provide coverage.
- Many circumstances may fit the language of your policy to trigger coverage, so it may be worthwhile to reach out to your insurance agent or carrier to discuss your options.
- Keep track of your losses and maintain detailed records to support any claim you may make.
- Carefully consider your options before agreeing to reduce rents, invoices, or other amounts due; an agreed reduction may not be treated as a loss, whereas an abatement or deferral may preserve your losses for a future claim.
- Keep in mind that insurers are likely to face an enormous number of COVID-19 claims, so they will have a strong incentive to highly scrutinize COVID-19 claims, require strict compliance with minor policy terms and conditions, and narrowly interpret coverage provisions and broadly interpret policy exclusions to avoid covering COVID-19 claims.
- When making a claim you should avoid giving insurers an excuse to deny your COVID-91 claim by reviewing your policy language carefully and complying with all requirements and conditions, including:
- Giving prompt notice of claims and including all material facts giving rise to your claim.
- Cooperating with the insurer by providing prompt responses to all reasonable requests for documents and information relating to your claim.
This outline is based upon the presentation by C. Andrew Roy in the webinar on “Navigating Through Contracts and Business Operations During the Pandemic”. A recording of this presentation is available HERE .
C. Andrew Roy
Winderweedle, Haines, Ward & Woodman, P.A.
aroy@whww.com
(407) 246-8808
Attorney C. Andrew Roy focuses on helping businesses, including startups and small/medium-sized businesses as their outside general counsel. He is a member of the Florida Bar and graduated cum laude from the Levin College of Law.
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