Business Interruption Insurance Coverage for COVID-19
In recent weeks, the governors of various states have issued executive orders, that, in light of the novel coronavirus crisis, “non-essential” businesses must close the office for either a set number of weeks, or indefinitely. This interruption to your business will likely cause significant losses in income and profits, force layoffs of employees, disrupt your supply chain, and cause other unforeseen damage to your business.
You recall that your business maintains a commercial insurance policy with “business interruption” coverage (“BIC”). Does maintaining BIC protect you from the foregoing potential losses? The answer is, most likely, “it depends.”
In general, BIC protects against business loss caused by physical damage to a commercial property, such as that caused by natural disasters like earthquakes or flooding. While this general description would appear to exclude loss caused by a viral outbreak, whether your particular policy insures against loss caused by a virus may depend upon the particular policy provisions and wording.
The scope of BIC policies can vary greatly from insurer to insurer and even policy to policy. Such coverage depends upon the “standardized” terms in the policy, but also any riders or endorsements that may have modified the policy. Your BIC may include a provision expressly providing for coverage in the event of a viral outbreak especially if your business is in travel, hospitality or healthcare, or your policy may contain an express exclusion for loss resulting from a virus.
Your rights might also soon be impacted by state or federal legislation concerning the duties of insurance companies with regard to the outbreak. NY and NJ, among other states, have recently introduced bills that, if they become law, would obligate insurance companies to cover losses caused by COVID-19. There are also legal questions that could directly impact a potential claim. For example, assuming coverage exists for interruption caused by a virus, was this particular closure caused directly by the virus…or was it caused by the government’s mandatory shutdown order?
These are important and nuanced issues that require experienced handling. Robinson Brog has considerable experience with addressing insurance coverage issues on behalf of insureds. Contact Nicholas Caputo at firstname.lastname@example.org to arrange a call to address your policy coverage and to see if Robinson Brog can help you navigate these complicated issues.
Robinson Brog, based in New York, N.Y., is a firm of over 50 attorneys that combines the resources, abilities and sophistication of a large law firm with the personal attention and entrepreneurial spirit of a New York City boutique practice. Our attorneys are also particularly experienced and savvy in the New York market. Our clients include public and private corporations, real estate owners and developers, labor unions, contractors, hotels, restaurants, entertainers and private individuals. With our competitive rates, aggressive style and personal accessibility, Robinson Brog has earned a loyal and long-standing client base.