BUSINESS INTERRUPTION LOSS DUE TO COVID-19

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If your Florida business has been forced to close due to the outbreak of COVID-19, you might be thinking about turning to your commercial property insurance to help you cover your losses. After all, the reason you have insurance is to pay for losses due to unforeseen threats to your business’s survival. However, insurance matters are rarely straightforward, and this is no exception.

Florida Business Interruption (BI) Coverage

BI insurance is generally an add-on to a commercial property policy. Commercial property policies are intended to cover direct physical loss or damage to a property caused by a specific peril (e.g., fire, wind, earthquake, etc.). Similarly, the BI add on to a commercial property policy generally requires a "direct physical loss or damage" to property at the insured premises to trigger coverage.

There has been some debate in the past about what constitutes a direct physical loss or damage to property. Courts have been split on this topic.

Roughly 15 years ago, in response to the Avian bird flu scare, most U.S. insurers added an exclusion to their commercial property policies to resolve this issue. The exclusion, ISO form COP 01 40 07 06 "Exclusion for Loss Due to Virus or Bacteria," specifically excludes coverage for losses caused by a virus.

Although this exclusion, if present in a particular policy, would seem to settle the question of whether there is business interruption coverage for claims related to COVID-19, there are several factors that may change this result. First, not all policies added the exclusion. In fact, in one of the first cases to challenge a coverage denial for a business interruption loss related to the coronavirus, the complaint alleges that the insurance policy did not include the virus exclusion.

In addition, some policies issued to the healthcare and hospitality industries expressly provide insurance coverage for losses caused by communicable or infectious diseases even in the absence of direct physical damages to the insured property.

Some insurance recovery firms have also pushed the idea that a shelter-in-place order or other government order that shuts down a business (a civil authority exception) may avoid the virus exclusion since the loss would be caused by government action as opposed to being caused by the coronavirus.

Finally, legislators in at least one state (New Jersey) have introduced a bill that would force certain insurance companies to provide coverage for business interruption notwithstanding the virus exclusion. However, shortly after it was introduced, the New Jersey bill was put on hold indefinitely, at least in part because it was unclear whether the bill would be enforceable in the courts should it become law. 

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To get answers to your questions about business interruption insurance, you should have an experienced insurance claim attorney examine your policy. Like the industry organization leaders who responded negatively to the congressional representatives’ request, your insurance agent and insurance company representatives might quickly tell you your business is not covered for COVID-19 related losses. In contrast, the insurance claim attorneys at Marten | Chiappetta will closely and carefully analyze your policy, looking for specific ambiguities or omissions that could allow for coverage.

Our skilled attorneys have helped clients recover millions in property insurance, personal injury, and commercial litigation matters and want to help you. If you have questions or concerns about your commercial property insurance, please contact us. We know how insurance companies, insurance policies, and the law work and will fight to ensure your rights.

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