Nearly every business has been dramatically impacted by COVID-19. A common question that continues to come up is if there is any insurance which may cover any losses related to COVID-19. The short answer is maybe. Even “standard” insurance policies have language and coverage that can vary drastically. Further complicating things, the key coverage provisions in many policies are changed through “endorsements.” As a result, there is no bright line rule about coverage in these uncertain terms. A careful analysis of the policy language and any endorsements, combined with an up-to-date review of any court rulings on the at-issue language, is required.
Here is a short summary of these types of policies and coverage that may apply. Please note, this is a general overview of issues that are likely to come up and should not be relied upon in making any business decisions. It should go without saying that this is not “legal advice.” If you are interested in a free consultation where we review and analyze your business insurance policy, please contact us at 303-355-7202.
COMPREHENSIVE GENERAL LIABILITY INSURANCE (CGL)
Most businesses carry some form of General Liability Insurance. To the extent a claim is made against a business for the failure to enact reasonable precautions to prevent consumers from contracting COVID-19, we would expect coverage to apply. Practical considerations of pinpointing the time of infection would seem to indicate any such claims will be rare.
BUSINESS INTERRUPTION INSURANCE (BI)
Business Interruption Insurance (BI) is usually an additional form of coverage business owners can purchase along with their CGL insurance. While the policies generally require direct “physical loss or damage,” some opportunities for coverage exists. If the language itself is ambiguous, implicating that it is reasonably susceptible to more than one meaning, coverage may apply. Typically any ambiguous provisions in insurance policies rule in favor of coverage.
There is one other issue that can arise with these provisions. As a result of the Avian bird flu, many insurers added an exclusion to their policies to try to exclude coverage for “viruses.” This exclusion, contained in a standard form put out by the insurance industry is usually titled, "Exclusion for Loss Due to Virus or Bacteria." This exclusion claims to specifically exclude coverage for losses caused by a virus.
Although this exclusion, if present (and many policies do not contain this), would seem to settle the question of whether there is business interruption coverage for claims related to COVID-19, there are several issues that may change this result. A careful review of the actual policy language and a review of any court rulings addressing this language is required.
Some policies also contain “Civilian Authority” coverage. This coverage, or an exclusion related to “Civilian Authority,” addresses issues when governments (including local governmental entities) order a shut-down of a particular form of business. Some examples where this may apply include restaurants and hair salons. With all of these issues present, a careful review of the applicable insurance policy is critical.
At Fuicelli & Lee, P.C., we are experts in reviewing applicable policies and, when available, presenting claims to insurance companies. If you have any questions about what coverage your business has, and any potential claims, please contact us today.