Businesses are hurting due to COVID-19 slow-downs and closures. Here is my top-five list of things to do to protect your right to collect on your business interruption (a/k/a business income) insurance:
5. Don’t Believe the Propaganda. The insurance industry is trying to stop business owners from making claims by repeating the mantra “no insurance available for COVID-19 claims.” That’s just not true. While some businesses have “virus” or “communicable disease” exclusions, we are finding that many of our clients’ policies don’t have that exclusion. (One analysis is that 80% of policies don’t.) And even with that exclusion, hope is not necessarily lost. There are many, many different kinds of business income policies out there—the specific wording of your policy (even very minor differences) will matter. When an insurer tells you that virus contamination isn’t “property damage” remember that most policies are written on an “all-risk” basis, meaning that it is up to the insurer to clearly exclude something as a “cause of loss.” Courts in Oregon, Washington, and elsewhere have found that contamination from smoke, chemical odors, and e coli counts as “physical loss or damage.” Also, most policies contain “civil authority” coverage that overrides any requirement that your property be damaged—meaning that if you lose business due to a “stay-home” or “shelter-in-place” government order, like the one just announced in Oregon, or the Washington restaurant order, you may have coverage.
4. Document Everything. This is the time to start keeping a journal! Insurance companies often fight claims on the basis that the policyholder didn’t keep contemporaneous records of why decisions were made or how much money was lost. Spend the time now to write things down, confirm conversations in an e mail, and save documents in a safe place (in the cloud).
3. Gather Your Complete Insurance Policy. We frequently find that business owners don’t have their own complete copy of their policy. All parts of an insurance policy work together. Ask your broker to send you a complete copy of each of your policies (particularly your property insurance policy), read it yourself, and have your legal adviser read it.
2. Be Prepared for a Fight. We don’t mean to give anyone false hope here—be prepared to battle with your insurance company. While some law firms, such as ours, have litigated similar claims before, a number of the legal theories have not been tested in any court, anywhere. And there will be a lot of factual issues in dispute. (For example, for a “civil authority” claim, the business may need to show the presence of the virus, or a loss of use of property, within a certain radius of the business.) A team of experienced advisers can help guide you, ideally starting with your insurance broker.
1. Make the Claim. Many property policies have short windows in which a business income claim needs to be asserted or it may be difficult to recover. And there is almost no reason not to make a claim in these circumstances—the investment of time is minimal. Also, if your business has not yet been directly subject to a government order, making a claim will be easier if/when there is a government edict shutting down access (implicating “civil authority” coverage). Finally, there is a good chance that there will be legislative pressure on insurers to pay, and the higher the number of claims, the better (and also, if you haven’t made a claim, you may not benefit). So remember the B-school adage “if you don’t A-S-K, you won’t G-E-T,” and work with your broker or lawyer to put in that claim.
As our friends at United Policyholders are saying: “Bottom line: Don’t take no for an answer until you’ve exhausted all arguments and avenues for help. And there are many of them.”