The United States declared a national emergency in response to COVID-19 on March 13, 2020, and states quickly followed with stay-at-home orders that impacted businesses and institutions nationwide. It has now been nine full months since the pandemic emerged in the United States and businesses began to shut down in the face of contamination and civil authority orders effecting restrictions on access to and use of their premises.
Like many businesses, colleges and universities across the country have had to dramatically alter their operations in response to the coronavirus pandemic. Most students completed the spring 2020 semester through online instruction after campuses closed in response to rising infection rates and government shutdown orders. According to the Chronicle of Higher Education, roughly one-quarter of institutions of higher education are providing instruction this fall semester either fully or primarily in person, one-quarter are using a hybrid model, and the remainder operating fully or primarily online.
One word that aptly describes the devastation that is 2020 is “relentless.” The COVID-19 pandemic has caused both personal and economic suffering throughout the world for over six months. Against the backdrop of the already devastating effects of COVID-19, several regions in the United States have recently experienced powerful storms and historically large wildfires. The wildfires in the western United States and Canada have been especially catastrophic this year—burning millions of acres, forcing evacuations, damaging air quality, and creating blankets of smoke extending over much of the country. The fires have destroyed homes and businesses and will lead to hundreds or thousands of insurance claims under homeowners, commercial property, and business interruption policies.
What happens under First Party Property/Business Interruption insurance when more than one arguably covered cause of loss impacts a business at the same time?
His daughter missing and a secret government program uncovered …
Ben Affleck’s detective thriller Hypnotic was next in line to be on the actor’s list of blockbuster films. That is, until the COVID-19 pandemic halted the film while it was still in pre-production. To insure against such business interruption risks and delay, Hypnotic’s production company, Hoosegow (Hypnotic) Productions Inc., had purchased a Film Producer’s policy from Chubb National Insurance Company.
As the COVID-19 public health crisis continues to surge globally, insurers have closed ranks behind the position that commercial property policies are “not designed” to cover pandemic-related losses, including business interruption. But the various justifications they advance for this assertion often collapse under scrutiny of the relevant policy language. Insurers have taken an early stand on the threshold issue of whether the actual or threatened presence of coronavirus and/or COVID-19 can even trigger coverage as a matter of law, telling both their insureds and the courts that the virus’s presence does not constitute “physical loss of or damage to property,” the event typically required for property policies to respond.
Many U.S. businesses face income losses from theft, vandalism and resulting curfew orders, which have affected numerous cities in recent days.
Commercial property insurance policies may provide coverage for these losses, which are and should be treated as a separate claim from pandemic-related losses. Property policies cover physical damage to property and, usually, also provide coverage for business interruption losses if certain conditions are met. Whatever position insurers may take on contamination from COVID-19, they cannot plausibly contest that shattered windows, broken fixtures and stolen merchandise are physical loss or damage. And, while insurance policies vary, typically there is business interruption coverage for “Civil Authority” orders, such as curfews requiring businesses to close. Nearly always, such coverage requires the existence of property damage within some limited geographic radius surrounding the policyholder’s location. This often ranges from one to 10 miles. So if your business is closed by a curfew order and, for example, a building down the block had its windows shattered by thrown bricks, or worse, there is every reason to submit a claim. Bear in mind that, depending on the wording of your policy, the trigger for Civil Authority coverage may not be limited to damage to buildings: it may apply to property within buildings and property in the street, potentially including vandalized vehicles. Think outside the box (store).
The profound impact of COVID-19 leading businesses to file first-party insurance claims is now well known. Further, insurance companies are systematically pushing back on potential coverage for COVID-19, with some issuing blanket coverage denials without investigation. In other words, this is not an ordinary claims environment. Against this backdrop, many policyholders are facing what may be their first significant insurance claim. This primer will familiarize such policyholders with the initial steps of the first-party insurance claims process. Whether a potential claim is related to COVID-19 or not, understanding the claims process is the best first step towards avoiding pitfalls and maximizing chances of recovery.
In January, we were among the first to post on the insurance implications of coronavirus. Since then, the epidemic has landed on our shores, dragged down the stock market, and become a political football. It has affected supply chains originating in China, with significant results for companies like Apple. And it threatens business continuity in the U.S. It is important to remember that the threat to the economic cycle does not originate from financial forces like a tightening of credit, but in nuts-and-bolts workings of the manufacturing and service economy, where both bottlenecks in supply and a pullback in demand threaten markets. Some of these losses are insurable. This post reviews recent coverage developments and notes practical coverage considerations that companies might overlook.
There has been a drumbeat of news reports about Wuhan, China, a city more populous than any in the United States, which is in effective lock-down because of the coronavirus. Foreign nationals are being evacuated, travel has been restricted, and business is at a standstill. At a time like this, preserving public health is the highest priority. But businesses, both local and global, are also affected by shut-down orders, disruptions to their supply chains, mass sick days, and loss of business. Many, especially providers of hospitality or health care, may face elevated liability risks for exposing others to a contagion. It is important to remember that insurance may be available to meet these risks.
Hurricane Barry provides the latest reminder of insurance precautions that should always be top of mind for business owners in coastal areas. In “Hurricane Barry: Prepare Now to Maximize Insurance Recoveries,” colleagues Tamara D. Bruno, David F. Klein, Joseph D. Jean, Vincent E. Morgan and Matthew F. Putorti provide a list of helpful reminders and immediate and proactive steps one should take to maximize insurance recovery before, during and after a tropical storm or hurricane makes landfall.