The COVID-19 pandemic has dramatically impacted operations of “non-essential businesses,” such as restaurants and retail establishments, over the past 9 months, placing the continued existence of many businesses in jeopardy. This program will discuss the potential for insurance recovery for business-interruption losses caused by COVID-19 and the resulting civil authority orders under commercial property policies. Specifically, this program will update you on the current state of the law and discuss the impact of recent court rulings. As background, we will identify the typical insuring language in property policies for business income and extra expense losses, civil authority coverage, and additional communicable-disease type coverage that may be available; and how policyholders can trigger coverage under those insuring agreements. We will then delve into the arguments policyholders are making in favor of coverage and the common defenses raised by insurance companies, including the lack of “direct physical loss of or damage to property” argument and the virus exclusion. We will analyze recent court decisions, often dependent on the applicable state law and the black-letter law of policy interpretation typically favorable to policyholders, and the trends in the law. Finally, we will list specific and practical steps policyholders should take to preserve and maximize coverage for their COVID-19 losses.
Key topics to be discussed:
- The key policy language for coverage for business losses from COVID-19 and resulting state closure orders in commercial property policies.
- Contract interpretation principles favoring coverage and ambiguous policy provisions.
- Court trends on coverage rulings to date – with a focus on pro-policyholder decisions.
- Practical steps for preserving and maximizing coverage for business interruption losses.
- Potential Coverages and Elements for Each (3:00-3:10)
- Communicable Disease-Types of Coverage
- Business Income and Extra Expense Coverage
- Civil Authority Coverage
- Policyholder Arguments for Each Type of Coverage (3:10-3:20)
- Insurance Company Defenses to Each Type of Coverage
- Black Letter Law on Contract Interpretation Favors Policyholders, including (3:20-3:30)
- Ambiguous Provisions – in Favor of Coverage
- Reasonable Expectations Doctrine
- Superfluous Language
- Recent Trends in Case Law: Pro-Policyholder Rulings versus Pro-Insurer Holdings (3:30-3:40)
- Steps to Your Protect Business Interruption Coverage (3:40-4:00)