You have a business, and you were a responsible business owner. You insured it against a variety of possible calamities, and included business income interruption insurance so you could continue meeting your financial obligations even if there is a disaster.
But then COVID-19 hit, and the government put everyone in your area on lockdown. Maybe your business can’t operate at all remotely, or maybe it “just” has taken a huge hit as people stay home. Regardless, now is the time you need your insurance.
You May Hear Disturbing News
However, as you review your policy, or contact your agent or insurer, you may be hearing disturbing news. Your insurance policy only covers business income in the event there is “direct physical loss of or damage to” your premises.
You have coverage for “Civil Authority” decisions, but that appears to be limited to “direct physical loss of or damage to” property that is not yours but affects yours. And you have an “Acts and Decisions” exclusion that excludes coverage for decisions made by government entities. According to your insurer, you have no business income interruption coverage for COVID-19, even though you cannot access your business premises.
Do I Have any Options?
Do not assume that all is lost and you have no options. Many jurisdictions define “direct physical loss” differently. Some do require that there be direct physical damage to a building. But many courts in the Ninth Circuit and elsewhere have held that anything that makes a building uninhabitable, including smoke, foul odors and gas leaks, is considered a “direct physical loss” that will trigger the business income provision. If a building is uninhabitable because of a gas leak that can cause illness or even death, then presumably it is uninhabitable because of a virus that does the same. One court noted that “physical” simply means “not emotional or mental or theoretical.” A virus is physical, not theoretical, and so is the air that carries it. If the air in a building is believed to be contaminated, that is a direct physical loss. And if civil authorities shut down all buildings because of a virus, that may well be covered as well.
These are all very new issues and the law related to them will be evolving rapidly as courts encounter an expected wave of lawsuits about business income insurance and quarantine shutdowns.
The knowledgeable attorneys at Kantor & Kantor can help you review your policy, negotiate with your insurer for coverage, determine if legal action is necessary, and represent you at every stage. Please call for a free consultation at 888-569-6013 or use our online contact form.