Standard property insurance policies, through their business interruption coverage, will pay for business income losses and property damage when there is a “physical loss of, or damage to” property. This is generally designed to cover losses that result from damage caused by hurricanes, fire, wind damage, or theft. Many business owners who were mandated to close for the past few months assume that following the Covid-19 pandemic, they would be covered as well, especially after the Centers for Disease Control (CDC) admitted that “it may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it.”
So, if it is possible that Covid-19 could be spread in this manner and it necessitated the closure of businesses that resulted in losses or damages, it should mean that business owners would have the ability to file a claim with their insurance company, right?
Unfortunately, the answer isn’t that easy as hundreds of business owners across the country are coming to find out.
One such business out of New Castle, Pennsylvania, Town & Country Bar and Grille (1 S.A.N.T. Inc), filed a lawsuit on June 11, 2020 against their insurance provider, Berkshire Hathaway unit National Fire and Marine Insurance Co., who has denied their claim for business losses during the state-ordered coronavirus closures. According to their lawsuit, Town & Country, which was deemed a “nonessential” business, was forced to close their physical locations in March to limit person-to-person transmission of the virus, causing a physical loss to the business, which the restaurant claims should have been covered under their policy.
The complaint claims that in 2006, the Insurance Services Office, Inc. (ISO) and the American Association of Insurance Services, two insurance trade services who represent hundreds of insurance providers, circulated the “New Endorsements File to Address Exclusion of Loss Due to Virus or Bacteria” to exclude viruses and bacteria from insurance coverage after pointing out that “ viral and bacterial contamination are specific types [of contamination] that appear to warrant particular attention at this point in time” as “disease causing agents may . . . enable the spread of disease by their presence on internal building surfaces or the surfaces of personal property” and noted that such an event could well lead to claims, including for business interruption. The ISO also stated, “building and personal property could arguably become contaminated by viruses…” and that “an allegation of property damage may be a point of disagreement in a particular case.” Prior to presenting these points, the pollution exclusion in insurance policies did not mention viruses or bacteria and as the insurers specifically stated, the possibility of a pandemic was exactly the type of situation that they hadn’t intended their policies to cover.
The complaint also points out that the language in their policy saying, “direct physical loss of or damage” could trigger coverage by emphasizing the “or”. The use of “or” means that coverage could be triggered if either a physical loss “OR” damage occurs.
Following the concerns of the ISO in 2007, insurance providers began to add versions of the recommended exclusions to their policies. There is no standard exclusion and the language will vary with each insurer and policy. This is why it is important to read the language of your business insurance policy carefully to determine what exclusions may apply, as it is possible that a policy without them could cover any losses related to Covid-19.
The lawsuit brought by Town & Country against their insurance provider regarding the coronavirus is not the first and will not be the last, and it is possible that the courts may find coverage to exist for losses related to the coronavirus even with the vehement denials by the insurance industry.
The best course of action if you are a business owner is to notify your insurer of any losses you have had due to the virus and contact an insurance coverage lawyer when needed. Submit your business loss claim before it’s too late. We offer a free, no-risk review of insurance policies for businesses that have lost money due to the shutdown. You should act quickly because business interruption insurance claims could be lost completely when business owners delay.
If you have any questions regarding a business loss claim, or other insurance policyholder issues, contact America’s Consumer Lawyer to set up a free initial consultation. America’s Consumer Lawyer, has an A+ BBB rating and over 1,000 five-star reviews from our clients and we are here for you 24/7.
