The unprecedented global cessation caused by the COVID-19 pandemic will have lasting effects on companies worldwide. COVID-19 and the government regulations to control the spread thereof have caused an increasing number of businesses to suspend operations and close down facilities, resulting in substantial losses. Any business owner with a commercial insurance policy that has suffered losses due to COVID-19 should have their policy reviewed immediately by an attorney to determine if they can recover their losses through business interruption insurance. Because insurance companies will attempt to deny claims due to the policy language or exclusions contained therein, it is critical for business owners to understand their policy rights, as well as current and future legal developments in the insurance sector relating to COVID-19, to ensure they are afforded the most protection possible.
I. Business Interruption Insurance and Litigation
Business interruption insurance covers business income that is lost or expenses incurred in the event of a stoppage in business operations due to a disaster, such as hurricanes, earthquakes, fire, or pandemics such as COVID-19. In many cases, business interruption insurance will also cover losses caused by government action, otherwise known as civil authority coverage. While each policy is different, business interruption insurance may cover lost profits, fixed costs, expenses associated with moving to a temporary business location, ingress/egress costs, employee wages, and loan payments, among other things. Each business’ coverage will be determined on a case by case basis, and therefore it is imperative that the policyholder understand their policy, including any time limitations or notice requirements thereunder required to trigger coverage.