COVID-19 FAQs ABOUT BUSINESS INTERRUPTION

Maintain accurate records of your losses, operations, schedule, payroll, and expenses you’ve incurred before and after the start of this crisis. Do whatever you can to ensure continued operation of your business and the health and well-being of your employees.
First, do not call your insurance broker, as their answer will typically be that you have no coverage. Brokers are the first line of defense for the insurance industry and often motivated to limit or not file claims because it impacts their compensation. What you should do first is have somebody competent review it. Brokers are specifically not competent and often not authorized by their contracts with the insurance companies to review and interpret insurance policy.

Second, do not report the claim to your insurance company until you understand all the different trails in your particular policy so that you can present the claim that has the best chance of being covered. When you present the claim to your insurance company, the people on the other end of the phone are looking at scripts that have been prepared by the insurance company, and they ask you a series of questions that lead you out of coverage. If you are not properly prepared, you could fall into the trap of being overly cooperative and helpful and over-reporting information that could end up hurting you down the line and serving as a basis for a denial. The best course of action to take is to have a lawyer review your policy and go through the claims process with you.
Other types of insurance exist that could possibly extend to COVID-19 losses. Some policies provide coverage when the interruption is the result of an order by a Civil Authority. Generally, Civil Authority coverage is intended to apply in situations where access to an insured’s property is prevented or prohibited by an order of civil authority issued as a result of physical damage. An order by a “Civil Authority” includes orders issued by governments for businesses to close or restrict access—like the ones issued by cities or counties in the wake of the COVID-19 pandemic.
Business Interruption or Civil Authority coverage is sometimes limited to situations where access to the business is prohibited as a result of property damage. Kabateck LLP has been working closely with local and state government officials to include language in their orders specifying “that the presence of COVID-19 causes property damage.” This language will increase the likelihood of being able to obtain coverage for policyholders. We have had a positive response from officials throughout the United States.
Some policies contain an exclusion for losses resulting from a virus or “caused by” a virus. However, these exclusions are not absolute. Without reviewing the actual language of your insurance policy, there is no way to confirm whether your business has coverage for COVID-19 losses. Please note the virus exclusion is usually added to your policy by an Endorsement. The Endorsement number is CP 01 40 07 06. If your insurance policy has this Endorsement getting covered will be much harder. Exclusions must be conspicuous, plain, and clear, and are interpreted narrowly, and against the insurance company. Unless your property was closed due to contamination, there is a strong argument that your losses are not “caused by” the virus, but rather caused by the government’s orders.
Property insurance policies, also termed profits coverage, do not include liability policies or workers' compensation policies. These policies are coverage for damage to your dwellings, your buildings, and coverage for your business income loss or losses. Another term used is business interruption coverage which is an additional coverage in almost every commercial property insurance policy.
First, determine if the current policy you have is an all risks type of policy or a specified peril policy. This is determined by the coverage grant. Most policies are all risks type policies. These all risks policies usually cover all direct physical loss over damage to covered property unless they are excluded.

Second, you have to determine if the loss that you have incurred is due to COVID-19 and/or if it was triggered by the virus, which can be difficult to pinpoint since in the vast majority of cases, there is no physical damage to any business property--there is just a mandated shut down and closure. The financial losses that could be incurred, depending on the business industry could include food and supply spoilage, rent, equipment leases, prior contracts with suppliers, utilities, salaries of workers, etc.

In the case that your policy has a virus exclusion, this would usually refer to an instance in which the business itself is contaminated by the virus. For COVID-19 cases, the majority of closures were and are preventative to help prevent the potential spread of the virus. Social distancing measures also contributed.
Ninety-five percent--it's the standard operating procedure and fundamental business plan of every insurance company to say no. And that results in 95% of the people accepting what the insurance company says and taking care of the loss themselves. Only five percent end up getting the help that they need.
We're feeling very, very confident that at the end of the day, although there will be a fight, people will be covered.
Direct physical damage to business property, such as by fire, is usually the trigger for loss of profits. Under this kind of scenario, you would get paid the cost to rebuild your property, plus you would get paid usually twelve months during the period of restoration for the length of time it took you to rebuild your property, for your loss profits, plus your extra expenses incurred during the rebuilding process. Those extra expenses can include things like salary that you continue to pay, storage of inventory, and lots of different aid like renting another space if you try to open up on limited days at another space.

Another common instance in which business interruption could occur would be if there is a change that limits the direct access to a business or property, resulting in a profit loss. Depending on the specifics of the situation, such as the business closure period, an additional coverage may be required, called civil authority which allows you to collect depending on the elimination or closure period--sometimes it's seventy-two hours, sometimes it's reduced down to twenty-four. It allows you to collect for lack of access to your property due to damage to other properties in the area.
The typical virus exclusion prevents coverage for any damage caused by or resulting from any virus, bacterium, or microorganism that induces or is capable of inducing physical illness, distress, or disease. Any losses stemming from the finding of virus in your business will be excluded. In the case of COVID-19, the majority of instances and claims are due to government mandated order for closure, so all losses stemming from the government order should be covered.
Don't give up on filing these claims. Give your policy and your case a closer look. Speak to a lawyer or educated party so that you are knowledgeable and able to fight your insurance company on this issue because their business model is going to be to delay and then deny your claim. If you are well prepared and have background and insight into the industry and your specific claim, the insurance company will have a harder time denying you coverage that you are entitled to.
The answer will depend on the language contained in your insurance policies. There is no uniform rule for which type of policy covers these losses. Some policies contain Business Interruption Coverage or Civil Authority Coverage which apply to losses sustained as a result of closure orders issued by the government—such as the recent orders restricting access to restaurants, bars, and other public establishments. Attorneys with experience in insurance coverage may be able to help navigate these issues.
BI Coverage is generally intended to cover losses from interruptions to a company’s operations, including lost revenues and other expenses such as payroll. BI Coverage is often provided in a separate form and has its own policy limit and deductible. A review of your policy will help determine whether you have it.
Not yet. You should speak with an attorney before contacting your insurance company about COVID-19 losses. You will need to be prepared for how to report the claim. When you report a claim, the people on the other end of the line are using scripts to question you which lead you to answers which result in no coverage. The coverage needed in this situation is far too complicated to navigate on your own without first being informed. Consult with an attorney before you make a claim.
If your business has suffered losses or continues to incur expenses due to the COVID-19 pandemic, you should speak with an attorney who understands insurance coverage. Here are some additional tips to keep in mind:

Get a copy of all of your policies. Many people often assume the “declarations page” which lists the policy limits is their policy. It is not. And you may have more that one applicable policy. Contact your broker, agent, or salesperson, and request that they immediately email you a copy of all of your policies.

Do not rely on coverage opinions from your broker or agent. Insurance brokers or agents often incorrectly tell you that your losses are not covered. They are the insurance company’s “first line of defense” against you. Do not rely on what they tell you.

Maintain records of your losses and expenses. Make sure you maintain accurate records of your losses, operations, schedule, payroll, and expenses you’ve incurred before and after the start of this crisis. You will need to prove your losses.

Document your communications with the insurance company. Insurance adjusters might say something favorable over the phone but fail to follow through. If you are already been in touch with your insurance company, keep a log of your communications.

Focus on your operation. Do whatever you can to ensure continued operation of your business and the health and well-being of your employees. We must stay positive.
For more information, or if you have any questions, feel free to contact us.

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