As many businesses have been ordered shuttered by Governor Wolf, there is a growing concern by all businesses, both big and small, as to how they can pay their debts and survive, while being forced to close by the Governor. Many business are unaware of business interruption insurance, which is frequently bundled with your general coverage. Business interruption insurance is a type of insurance that covers the loss of income that a business suffers after a disaster.
The insurance was primarily written to cover events like flooding or fires at a business, but also covers closing due to exercises of civil authority.
It is also important to note that Courts have found that physical damage to a business is not necessarily required. There have been insurance cases in other parts of the United States where a building was found to be temporarily unusable due to gas or smoke and the courts have found that coverage was available.
You should also be aware that a long term complete loss of use is usually not required. A complete loss of business for a few days or a partial closure of business may fall within the scope of the policy.
Many business interruption policies do include exclusions for closure due to infectious diseases; however, there are several arguments against this issue. First, none of the businesses that we have dealt with in the past two weeks have actually closed due to anyone having coronavirus. No officer, employee or customer has been known to have contracted coronavirus. In other words, these businesses have not closed due to coronavirus; they have closed due to the Governor and Department of Health’s orders. The government orders are the actions of a civil authority, which are covered in many policies.
Additionally, Pennsylvania has traditionally been a state that is pro-insured. Any ambiguities in an insurance policy are to be construed in favor of the insured. Pennsylvania Courts have used public policy arguments in the past to invalidate exclusions from insurance policies. Insurance coverage for coronavirus is truly unprecedented in Pennsylvania and in the United States. For a variety of political, practical and legal reasons, the Courts will be hard pressed to deny all insurance coverage for coronavirus business interruptions. However, the only way that a business can possibly obtain coverage is to first make a claim.
We are encouraging all businesses to review their business coverage policies and file a claim if it includes Business Interruption Insurance. We are happy to review your policies and advise on the filing of a claim. In the event of denial, which is likely at this point, a further request for review needs to be made to the insurer, which we are also happy to assist you in doing, as well as, if necessary, filing an action in a court of law against your insurance carrier.
If your business has been forced to close by Governor Wolf and you have an insurance policy providing business interruption coverage, contact us today to discuss your rights!