The Coronavirus has upended life for individuals and businesses alike. Many small businesses defined as “non-essential” by the government have suffered greatly as a result of lockdowns throughout the country. During this time, small businesses with interruption insurance policies may wonder if it is time to file a claim.
At Fricke & Associates, LLC, we want to help your business weather the economic storm that is Covid-19. There has been a lot of debate on whether business interruption policies should cover income loss from the pandemic. Consider the following to determine your next steps:
- Not All Insurance Companies Agree that Coverage Should Include the Pandemic.
Obviously, the impact of this pandemic was not predicted by businesses or insurance companies. As a result, some insurance companies are using the legal defense of “force majeure.” Simply put, the insurance company is claiming that they cannot meet their obligations due to unexpected external circumstances.
Some insurance companies say that COVID-19 does not fit the criterion because it is not related to a loss of income from a physical loss or damage to covered property. Additionally, loss of income due to market conditions, economic slowdown, or contamination concerns are not considered covered.
The American Property Casualty Insurance Association (APCIA) released a statement on April 6th saying, “Many commercial insurance policies, including those that have business interruption coverage, do not provide coverage for communicable diseases or viruses such as COVID-19. Pandemic outbreaks are uninsured because they are uninsurable. Any action to fundamentally alter business interruption provisions specifically, or property insurance generally, to retroactively mandate insurance coverage for viruses by voiding those exclusions, would immediately subject insurers to claim payment liability that threatens solvency and the ability to make good on the actual promises made in existing insurance policies.”
- President Trump is Siding with Businesses.
During his daily COVID-19 press conference on April 10, President Trump stated that he expects insurance companies to cover COVID-19-related losses as part of business interruption coverage, unless the policy specifically excludes viruses and pandemics.
Trump, a former business owner himself, insisted that insurance companies owe it to their customers to cover losses. With companies paying for business interruption coverage for years, Trump believes that when they finally need it, the insurance company should not say, ‘We’re not going to give it. “We can’t let that happen … I would like to see the insurance companies pay if they need to pay, if it’s fair,” President Trump communicated. Regardless of the President’s perspective, the final call on coverage lies with lawmakers and the courts.
- Being Pro-active Could Be Beneficial.
While you are in the waiting game to see what courts and lawmakers decide, take the following steps:
- Review your Business Interruption Insurance Policy Closely—If you do not have a copy of your policy on hand, request one from your insurance company. Look carefully at the covered losses, exclusions, and limitations. Having your attorney review the policy as well would be wise to avoid confusion.
- Find Out About the Notification Period—Some companies require their policyholders to submit claims within a designated time period. Make sure that you can show document compliance in your records and evidence of correspondence with the insurance company.
- Prepare Documentation for your Case—Your claim’s success could likely depend on how well you have documented the impact of the pandemic on your business. Start a file which highlights your loss of income, customer attrition rates, and incurred expenses.
Although the insurance company may deny your Coronavirus related claim while the litigation is still in process, it is important to lay the groundwork to contest their denial as the legal situation progresses.
If you are overwhelmed with paying bills and managing daily operations amid COVID-19, contact Fricke & Associates, LLC to help with your business interruption claim. We are well-versed in the latest developments with business interruption insurance and we can help you properly document all your losses.