I have been fielding many calls from business owners asking if their business insurance should pay for losses that have resulted from COVID-19 infections, contamination, harm to business property and slow-downs (or shut-downs) mandated by the government to slow the spread of the disease. These are complicated questions that we are prepared to investigate and answer.
The worldwide response to the novel coronavirus pandemic has been unprecedented. In order to slow the spread of this highly contagious virus, extraordinary steps have been taken – schools are cancelled, professional sports seasons are suspended, and as of mid-March, all non-essential businesses in the United States have been closed.
As we all know, the effect on the economy has been devastating. The unemployment rate as of mid-April is estimated to be around 14%, eclipsing the 10% unemployment rate of the “Great Recession” of 2008-2012. One economist at the Federal Reserve Bank in St. Louis estimates that thirty-percent of the work force could end up unemployed as a result of this crisis. That would exceed the peak unemployment rate (24.9%) of the Great Depression.
Entire sectors of the economy are shut down and those businesses that remain are a shadow of what they once were. Business owners around the country are struggling to figure out how to pay the bills and remain in a position to reopen when the virus is under control.
Many business owners have business interruption policies that are supposed to protect them from exactly this scenario – an extended business closure caused by outside influences.
However, whether a business insurance policy will coverage COVID-19 business interruption will be governed by the specific policy language, including various coverages and exclusions. There are four types of coverage generally available that may be applicable to address business losses:
Business income coverage.
Civil authority coverage.
Dependent property coverage.
Extra expenses coverage.
Insurance companies have already signaled their intention to deny virtually all claims related to this pandemic.
Many of the policies we have already reviewed provide coverage and we believe that the kind of blanket-denials we have seen is an unreasonable position for these companies to take – several states, as well as the President of the United States, agree. State legislators in New York, New Jersey, Massachusetts and Ohio have already introduced bills that would compel insurers to retroactively cover claims for COVID-19 losses.
Another potential means of recovery could be the proposed Pandemic Risk Insurance Act of 2020 (PRIA), which would create “a Federal program that provides for a transparent system of shared public and private compensation for business interruption losses resulting from a pandemic or outbreak of communicable disease.” This bill, if passed into law, would void exclusions in existing policies, provided those exclusions would be covered under PRIA provisions.
Our St. Louis personal injury law firm is already helping business stand up to their insurance companies and enforce business interruption insurance claims nationwide. If you are a business owner who has a business interruption insurance policy claim that has been denied, or if you would like assistance in filing a claim, please contact our firm.