COVID-19 has wreaked havoc on countless businesses in Kentucky and across America. We have received numerous calls from business owners in Louisville as well as clients from Paducah to Pikeville. Many of these business owners were denied coverage of their business interruption policies after making claims for losses suffered during the Coronavirus shut down (quarantine). Yet, many of these them have suffered catastrophic losses after being forced to close their businesses during government-mandated quarantines.
In order to help these clients, we first have to discover what their rights are under their business interruption insurance policies. Coverage always depends on the conditions and terms of the insurance policy and the circumstances leading to the business loss.
COVID-19 Business Loss Is Unprecedented
Business loss from a pandemic such as COVID-19 is largely a new frontier of insurance coverage issues. There is little, if any, current case law concerning business interruption insurance coverage for global infectious disease pandemics.
In Kentucky, numerous insurance companies sell business interruption insurance, including The Hartford, Farmers Insurance, AP Intego, Nationwide, Travelers, Insureon, Progressive, Allstate, State Farm, and Liberty Mutual.
Business interruption coverage that covers losses due to a virus or disease (such as Coronavirus/COVID-19) are not typically covered in most policies unless they are covered under a specific endorsement to the policy.
As with all insurance policies, the devil is in the details, so each policy and its endorsements must be carefully scrutinized before a determination can be made. For example, “Pandemic Disease Business Interruption Insurance” was a program developed by Lloyds of London Insurer following the Ebola epidemic that caused healthcare facilities to close and resulted in a loss of revenue during the government-mandated quarantine. This is the precise type of situation facing many business owners today with state and federal shelter in place orders and nonessential businesses being forced to close due to the Coronavirus (COVID-19).
Understanding Business Interruption Insurance Coverage
Business interruption insurance is a policy that business owners purchase to protect their business from loss of income that the business would have earned had the interrupting event not occurred.
Typical policy language reads, “…the policy owner is insured against loss resulting directly from necessary interruption of business caused by physical loss or damage by a peril not otherwise excluded herein…” It is important to note that policies generally require physical damage to insured property, caused by a covered peril that results in a quantifiable business interruption loss during the period of time it takes to restore the damaged property.
If you are unsure about your coverage, check your policy or call your broker to get a copy of your policy and an explanation of its terms. You may have one or more of the following types of insurance:
- Physical Damage to Insured Business Property. Many commercial property insurance policies contain business interruption coverage. They are often lumped into the property portion because, in order for coverage to kick in, there is almost always a requirement that there is physical damage to the insured property.
- Closure or Interruption Due to Civil Authority Mandates. Typically, this type of coverage is triggered when a business owner is unable to access their property due to a government authority restricting their access due to damage to their own property or adjacent property not owned by them. However, different states courts have varied in their interpretation of the property damage requirement in these types of policies, with some courts deeming coverage is triggered based upon restricted access only.
- Contingent Business Interruption Coverage. Coverage for these types of policies is triggered when a business loss occurs due to an interruption of products or services to a business caused by damage to the property of a third party upon which the policy owner depends. This could occur if a fire in an automotive parts supplier’s warehouse makes it impossible for the supplier to provide needed parts to an automotive manufacturer.
Protect Your Rights After Wrongful Denial of Business Interruption Insurance
Has an insurance company denied your business insurance claim? Whether your business interruption policy was wrongly denied will require a thorough evaluation of your policy and the circumstances related to your loss. Gray & White Law has the experience, skill, and necessary resources to investigate your case and fight to enforce your rights under your policy. We have a national reputation for forcing insurers to pay what is owed to their policyholders in cases of bad faith insurance policy benefit denials, and we have recovered millions of dollars for clients in their claims against insurers in Kentucky and across the United States.
Most recently, our firm was honored with both a Tier 1 Designation by Best Lawyers (the highest distinction awarded) and was one of only two firms in the entire state of Kentucky to be named in Law Dragon 500 for our work in consumer litigation.
Let our business litigation lawyers evaluate your potential wrongful denial of business interruption insurance today. We will provide you with an honest and trustworthy review of your potential claim, and if appropriate, we will fight hard to make the insurance company provide you with the coverage you deserve. Call us or fill out our online contact form today to get started.