States across the country are currently considering legislation to compel insurers to cover business losses due to COVID-19 closures. The U.S. House of Representatives is also considering two bills (HR 6494 and HR 6497) that deal generally with providing business interruption coverage for pandemic-related closures and business interruption due to a government order.
In the meantime, small business losses in the U.S. are climbing to somewhere between $300 and $500 billion, and businesses across the country are suing insurance companies to get them to cover their losses. Are these lawsuits worth pursuing? Should insurers be paying business interruption claims related to COVID-19 closures? Let’s examine the issues surrounding these claims.
Why Are Businesses Having Problems Getting Paid for Losses Due to COVID-19?
Insurance policies can be ambiguous and complicated, and business policies are no exception. Most business insurance policies include business interruption coverage for lost revenue and expenses during a closure due to direct physical loss of or damage to property or civil authority (i.e., government ordered shutdown). However, some limit coverage to losses caused by physical damage.
Many insurers have argued that threats of loss do not constitute a direct loss and are, therefore, not covered by business interruption insurance. They hold that COVID-19 has not caused physical loss or damage to property, so business interruption coverage does not apply. However, since there is no uniform rule for determining when insured property has suffered a direct physical loss, and in some cases, contamination and other incidents that make property unfit for use do constitute a direct physical loss covered by business interruption insurance, policyholders impacted by COVID-19 may be able to collect payment under their business interruption policies.
Some insurance policies also exclude damages caused by microorganisms that induce physical distress, illness or disease. However, unless explicitly excluded, a policy could be construed to provide coverage for losses caused by a pandemic, so again, pursuing legal options to seek payment may be a wise decision.
If a business insurance policy has civil authority coverage, then we would expect losses due to government-ordered closures related to the coronavirus pandemic to be covered. However, major insurance companies are trying to fight these claims too, since so many businesses are facing huge losses.
How a Business Interruption Insurance Claim Attorney Can Help
If your business has experienced losses due to the coronavirus pandemic, and you have questions about what your business insurance policy covers or need help filing a claim, the experienced business interruption insurance claim attorneys of Malik Law will be glad to help. Similarly, if you have already filed a claim and it has been denied, delayed, or underpaid, we would welcome the opportunity to put our legal expertise to work helping you get the payment you deserve.
Call us today at 407-500-1000 or submit the “Tell Us What Happened” form on our website for a free consultation with one of our expert Orlando insurance claim attorneys.