We hope all of our readers, clients, friends and colleagues are safe and practicing social distancing, washing your hands, not touching your face and doing all you can to protect yourselves from this Coronavirus pandemic. Our St. Lucie insurance attorneys are open for business and fully equipped to handle your legal needs using all the latest technology for electronic document signing, electronic filing with the courts, Zoom, Facetime, Skype, whatever it takes! A hot topic these days is whether Business Interruption Claims are covered under either a Commercial Property Insurance, Commercial Package Policy or a Business Owners Policy (BOP). As with any insurance, determining whether certain losses are covered depends on the terms and conditions of the particular insurance policy and all circumstances surrounding the loss. THIS GENERAL INFORMATION BLOG POST IS NOT LEGAL ADVICE AND IS NOT A SUBSTITUTE TO CONSULTING WITH AN INSURANCE ATTORNEY OR YOUR INSURANCE BROKER.
Generally speaking, business interruption insurance policies are “named peril” insurance where some physical damage, loss or destruction to tangible property needs to be triggered in order for there to be insurance. An initial hurdle any COVID-19 claim would face would be that an insurer would argue that there has not been “physical damage” to a property in the same way that typical covered perils (fire, lightning, tornadoes, etc.) would produce. Whether courts would consider presence of the coronavirus as “physical damage” is at this point an open question. This Fort Pierce Insurance Attorney anticipates there will be much litigation.
There is a further hurdle. Just as one example from a standard policy wording, in 2006 the Insurance Services Office created a form exclusion with these types of losses (pandemics like Zika, SARS, Avian Flu, etc.) in mind. The exclusion drafted by ISO (form CP 01 40 07 06) is called “Exclusion for Loss Due To Virus Or Bacteria” and it says:
“We [the insurer] will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”
A blanket exclusion for “virus” will be difficult to circumnavigate, however this is not yet a ‘closed case.’ Numerous legislators within certain states (New Jersey, Ohio, New York, Mass.) are eying the ‘surplus’ held by insurance companies and have proposed bills which would require insurers to pay business interruption claims to small business, even if policies contain virus exclusions. This would be an amazing development if it were come to pass, and perhaps unconstitutional(!), but our Port St. Lucie insurance attorneys can’t rule out amazing developments given the current situation.
Some policies might be written on “all risks” basis in which case the policy would need to be read carefully to ascertain whether there were any carve outs for airborne contagions. Civil Authority clauses may also need to be examined.
Indeed it is very important to read the policy. Some insureds may be insured under policy forms (Lloyd’s, etc.) which do not contain a virus exclusion clause. There may be an argument then that activation of civil authority orders, where governments close certain business like restaurants, might provide a coverage trigger if the government has said that the virus creates property damage by remaining on surfaces.
Certainly the coverage situation at this point is fluid. Any effected business which purchased business interruption insurance ought to carefully check their policy and consult with an experienced Fort Pierce insurance attorney to understand their situation.
We forsee also the possibility that Errors and Omissions against agent claims may come to the forefront as certain business like restaurants, hotels, and other hospitality would be particularly susceptible to shutdowns due to virus and if coverage was reduced during a long history of insurance, without proper consultation, errors may very well have occurred.
When an occurrence or accident requires that the “fine print” of an insurance policy be examined to determine coverage, the insurance aspects can become very complicated. Anyone involved in one of these situations should contact an experienced insurance attorney to protect your rights.
Fort Pierce Insurance attorney Todd C. Passman, P.A. handles all types of insurance and injury cases serving Port St. Lucie, Fort Pierce, Vero Beach, Stuart, and Okeechobee, Florida, and surrounding areas.
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If you, a family member or a friend have an insurance covered loss, or have questions please contact St. Lucie insurance attorney Todd C. Passman today, at (772) 465-9806.