Coronavirus Business Interruption, Part 2
Written by Jean Pierre Nogues
As we noted in an earlier release, some business interruption insurance policies may provide coverage for some COVID-related losses. While a few policies expressly cover such losses arising from viruses and epidemics, most are triggered by property damage at your place of business, near you, or at your suppliers’ and/or customers’ locations. Two possible impediments to finding business interruption coverage in more typical policies are (1) whether and in what circumstances a voluntary or government ordered shutdown triggers coverage; and (2) exclusions for losses related to viruses and other biologic agents. There are arguments and authorities supporting the notion that contamination of property constitutes property damage, and that government ordered shutdowns of property related to such damage trigger coverage. There may also be arguments regarding the applicability of biological agent exclusions. Lawsuits filed before the COVID situation arose are currently ongoing and may test those arguments. The outcome in those cases should help clarify coverage for COVID related claims.
As importantly, legislative efforts have recently gotten underway to address both of these issues. Members of Congress have written insurance industry executives asking that they consider COVID losses as covered business interruption losses. See letter here. And New Jersey is actively considering a bill that would make such losses covered regardless of exclusions and conditions in business interruption coverage to the contrary.
What does all this mean to you? First, you should check your existing policies to see if they provide business interruption coverage, what the triggering causes are, and what exclusions apply. Then you should consider tendering. Even if there are questions about property damage, triggering events and exclusions, you may want to tender. We do not know what the courts and legislatures will do as they deal with these issues , but we do know that the only way you can secure coverage is by tendering claims where there is any basis for doing so. If you have suffered business interruption losses, you should consider taking steps to document and track your losses on an ongoing basis. However this plays out, insurance, legislation, government programs, or otherwise, proof of losses will be required.
If you would like our assistance in reviewing policies or determining whether to tender, please contact Jean Nogues (firstname.lastname@example.org).