This article focuses on the various remedies available to certain entities, like businesses, employers, organizations and holders of insurance policies, for damages sustained as the result of the coronavirus (“Covid-19”). Although the early attention on economic recovery has been on business interruption insurance and other potentially applicable coverage offered through commercial property insurance policies, some relief may be afforded by commonly issued commercial general liability (“CGL”) insurance policies.
Business Interruption Coverage: Business interruption coverage is usually offered to provide monetary relief to an insured for lost profit and additional expenses incurred due to disruption to its business operations by “direct physical loss or damage” to covered property. It is expected that insurance companies will attempt to rebut claims for business interruption coverage by countering that the spread or threat of infection from the coronavirus would not qualify as damage to insured property. Many insurance policies also have straightforward “virus exclusions,” prohibiting coverage in the event of pandemic. On the bright side for policyholders, many US states like New York, New Jersey, Ohio, and Massachusetts are already proposing new laws that would require business interruption coverage for losses relating to the coronavirus, when and where there is an express virus exclusion. The State of Florida has not yet indicated whether it will follow in the footsteps of these other states and enact legislation mandating insurance companies to provide coverage to businesses impacted by Covid-19, however, we will continue to monitor how any new developments play out.
Event Cancellation Insurance: Many businesses throughout Miami-Dade County and South Florida hold event cancellation insurance to cover losses directly resulting from the cancellation of an event for reasons outside the control of the policyholder, like weather, terrorism, or disease. To use an international example, the organizers of the Wimbledon tennis tournament in England are reportedly attempting to recoup $141 million thanks to pandemic insurance it has taken out every year for the last 17 years (carrying a $2 million yearly price tag). Wimbledon’s organizers may have exhibited exceptional foresight in predicting a future pandemic because many event cancellation policies are subject to coverage exclusions for viruses, contagious diseases, quarantines, and/or pandemic. So-called “all cause” event cancellation policies, like Wimbledon’s, could provide coverage to businesses impacted by Covid-19. Because the success of these claims will usually boil down to specific circumstances and particular policy language, it is important to consult with an experienced insurance coverage attorney to assess the risks and rewards of submitting a claim.
Broker/Agent Claims: Even if your business is denied insurance coverage for losses caused by the coronavirus, a viable claim may exist against the broker of your insurance policy for failing to procure such coverage if you requested it or a representation existed that your business would be entitled to such coverage. Indeed, agents and brokers are generally covered by their own Errors & Omission (“E&O”) policies for actual or alleged acts, errors, misstatements, misleading statements, omissions, neglect, or breach of duty committed by an agent or broker while providing insurance services for pay. A prudent business owner has no need to panic. If they are sustaining damages due to the coronavirus-induced economic recession, there is scope to think outside of the box and consult with an experienced attorney knowledgeable in the areas of insurance recovery to assess whether they may be entitled to compensation for covered losses or the negligence of others.
Daniel Smith is the Founding Attorney of Salomon Smith PLLC, based in Miami-Dade County, Florida. Mr. Smith is experienced in handling insurance related matters and now focuses on exclusively representing policyholders after years of representing insurance companies. He can be reached at Daniel@salomonsmith.com or 305-297-1018.