COVID-19 Business Interruption Insurance: Preserve Your Claims

COVID-19 has caused significant financial impact on Providers, including the suspension or complete shutdown of some types of medical practices and surgery centers. Many states and municipal authorities have issued Executive Orders mandating non-essential business closures, including the suspension of elective and non-urgent medical procedures. For many Providers, this can mean the end of their business. Providers are now looking to their insurance companies to compensate for loss of business income and to survive the impact of COVID-19 governmental restrictions. Unfortunately, insurance companies are denying benefits that many business owners thought they had secured. Recent lawsuits and pending legislation have been filed to challenge insurance companies’ blanket denials of claims. It is important to preserve your claim by following the requirements contained in your policy to provide formal notice to the insurance company of your claim. Frier Levitt understands that our clients need to focus on patient care and practice matters and is offering complimentary review of your business insurance policy and evaluation of your claims.

Coverage Specifics. Many business insurance policies contain coverage for business losses relating to the suspension, shutdown or interruption based on Civil authority, ordinance or law, including “Business Income” and “Extra Expense.” This type of business interruption coverage provides for payment to policyholders for actual loss of business income incurred from a necessary suspension or slowdown of business operations for a specified period of time. At present, many of the orders in effect will qualify as a civil authority, ordinance or law, triggering coverage. But the analysis does not end there. 

“Physical Loss” Requirement. Insurance policies require that the suspension or slowdown of operations stem from actual “physical loss” or “damage” at the covered property, or within a specified distance from the covered property. The term “physical loss” or “damage” is not always defined in a Provider’s insurance policy, which paves the way for legal arguments over ambiguous terms. Insurance companies rely on the “physical loss” or “damage” requirement in issuing mass denials of COVID-19 related claims. However, Courts have issued rulings that physical damage or loss can occur even where the damage or loss is not visible, including for example the presence of asbestos, the release of ammonia, and bacteria in a home’s water supply. Needless to say, claims should be formally and thoughtfully submitted to the insurance company in order to preserve your rights.

Virus Exclusion. After the SARS and Ebola epidemics of 2003 and 2014, some insurance companies added virus and bacteria “exclusions”.  An “exclusion” is an insurance policy contract provision that permits the carrier to deny coverage and benefits, even if other policy conditions are satisfied. In COVID-19 related claims, even if a policyholder can show there was physical loss or damage at their premises, the claim can be denied if the policy contains a “virus” exclusion.  We can evaluate your policy to determine if such an exclusion applies.

Pending Lawsuits and Legislation. At least seven lawsuits have been filed by policyholders against insurance carriers asking the courts to “declare” that COVID-19 constitutes the “physical loss” or “damage” requirement and triggers coverage. In addition, New Jersey, New York, Ohio and Massachusetts all have bills pending to mandate business interruption coverage for losses incurred from COVID-19.  

How Frier Levitt Can Help

Frier Levitt is closely monitoring these bills and developments in business interruption coverage. In addition, we can help evaluate your policy, submit your claim and challenge any denial. This includes, but is not limited to, (1) gathering your insurance policies to determine what coverage you have; (2) documenting your business losses that are specifically related to COVID-19; (3) documenting any additional expenses you have incurred related to COVID-19, including expenses associated with moving out of your insured premises, and cleaning your insured premises. It is important to take action now, since insurance policies have strict “notice” requirements and failing to notify your insurance company promptly of your claim, may result in a denial of coverage.

Even if you have already submitted a claim and received a denial, or have been discouraged by your broker or carrier to submit a claim, you should not stop considering your options. It is worth having Frier Levitt review your policy and discuss your claim. Contact us for a free consultation.

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