It seems as if every business has been affected by the Government’s shutdowns in response to the novel Coronavirus and Covid-19. If you own a business, it is likely you have purchased business interruption insurance. Typically, this coverage is intended to protect the business owner should the premises or the property used to the operate the business be shut down due to damage to the property itself. Typical business interruption policies also protect the business owner if unable to access the property is by order of a civil authority. Almost all policies since the 2009 Swine Flu pandemic have included am exclusion for coverage due to pandemic or viruses.
So, is the business shut down due to the Covid-19 pandemic or due to orders of the civil authority? This is the argument being waged in the courts presently.
On March 18, 2020, a bi-partisan group of members of the U.S. House of Representatives sent a letter to several insurance industry trade associations noting the devastating impact the orders of civil authorities in response to Covid 19 were having on American businesses and requested that insurers cover these financial losses, stating that “Business interruption insurance is intended to protect business against income losses as a result of disruptions to their operations and recognizing income losses due to Covid-19 will help sustain America’s businesses through their turbulent times, keep their doors open, and retain employees on the payroll.” The insurance industry leaders have sent a response, rejecting the plea from the House of Representatives explaining that “Business interruption policies do not, and were not designed to, provide coverage against communicable diseases such as Covid-19.”
This issue will be decided in the courts. To protect yourself and your business, however, there are some things that you should immediately do.
The first thing you must do is to make a claim against your insurance carrier for business interruption loss. Each policy states the time period by which you must make a claim, known as proof of loss. If you fail to make that claim, within that period of time, regardless of how this issue ultimately plays out in the courts, you will be foreclosed from the benefit of any legal resolution requiring these policies to cover business interruption loss.
Any business owner interested in pursuing a claim for business interruption against their insurance carrier should file a claim. The claim will likely be denied. At that point, the business will have preserved its right to pursue a lawsuit within the period required by the policy or the state statute of limitations.