March 2020

THE BARNES WALKER EDUCATIONAL SERIES
proudly presents:

Business Interruption & COVID-19:
What Business Owners Need to Know

With businesses closing, people working from home, and stock prices falling, the Coronavirus (COVID-19) is having a real financial impact on American citizens and their businesses. In the midst of loss-causing closures, businesses may need to file claims with their property insurance carriers. If your business faces closure, and you plan to file a claim with your property insurance carrier, whether your specific losses will be covered will depend on the law in your jurisdiction and the specific language of various provisions of your insurance policy. However, in general, there are several types of coverage that may be implicated by a business closure, including coverage for physical property loss or damage, business interruption coverage, environmental coverage, and business travel accident coverage.¹

First, your business likely has coverage for property damage. Unfortunately, it is currently unclear whether carriers will cover losses resulting from COVID-19 closures under typical physical property loss or property damage coverage.² Policies covering property damage coverage typically require "direct physical loss,"³ "direct physical damage,"⁴ or "property damage"⁵ in order for coverage to be triggered. Interpretation of these phrases will depend on the law in the jurisdiction in which your business is located.⁶

Your business likely also has some form of business interruption coverage. "Business interruption insurance is generally intended to cover losses from direct interruptions to a company's operations, such as a fire, natural disaster or other event. Coverage may include lost revenues, rent, or utilities, among other things."⁷ Business interruption coverage can be triggered by either direct physical loss or damage or by indirect losses.⁸ Business interruption coverage for indirect losses comes in several forms: Civil Authority coverage, Ingress/Egress coverage, Contingent Business Interruption (coverage), Supply Chain coverage, Stock Throughout policy coverage, and Trade Disruption insurance coverage.⁹ The most relevant type of coverage is Civil Authority, which may apply if the government (at any level) issues a shelter-in-place or quarantine order that prevents you, your employees, and/or your customers from accessing your business property.¹⁰

Environmental policy coverage could also potentially apply to some losses – it typically covers "Bodily Injury, Property Damage and Cleanup Liability arising out of a Pollution Condition."¹¹ Again, whether your potential claim is covered would depend on the specific language of your policy.¹² Business travel accident coverage could also be a potential source of coverage for some losses that your business may face.¹³ If you have a business travel accident policy, it may cover medical expenses not covered by Worker's Compensation and in some cases, may cover expenses related to cancelled or interrupted trips.¹⁴

If you are a Florida business owner, and your property insurance claim for losses related to COVID-19 gets denied, you may still be able to recoup your losses through a lawsuit against your insurance company. If your claim gets denied, call Barnes Walker's litigation team at 941-741-8224 to see if you have any potential claims against your carrier.

Important Note: The information contained in the preceding Barnes Walker Educational Series article is summary in nature, does not cover all aspects of the law as it pertains to investment loss claims and is sent for educational purposes only for the benefit of clients, sellers, buyers, and members of the Realtor® Association of Sarasota and Manatee, Inc., of which we are a proud affiliate member. This article should not be considered as legal advice for anyone's situation nor is it intended as specific or detailed advice, as we do not have any information specific to anyone's circumstances. Further, the preceding article is not intended to be an all-inclusive discussion of investment loss claims, but a guide to the same, and there may be other matters not described in the article that may impact someone's particular situation. Therefore, always seek legal advice regarding your unique circumstances. Finally, this article is intended as a public service and is not a solicitation seeking legal employment of our firm by anyone.

¹ Coronavirus Disease (COVID-19): Frequently Asked Questions (FAQ), USI,
https://www.usi.com/content/downloads/Coronavirus_FAQ.pdf.

² Id.

³ Joseph A. Ziemianski, et al., Property Insurance Coverage Issues Associated with COVID-19, COZEN O’CONNOR, https://www.cozen.com/news-resources/publications/2020/property-insurance-coverage-issues-associated-with-covid-19.

⁴ Coronavirus Disease (COVID-19), supra note 1.

⁵ Id.

⁶ Coronavirus Disease (COVID-19), supra note 1; Joseph A. Ziemianski, et al., supra note 3.

⁷ Brian J. Pfeil and Christopher M. Meuler, Business Interruption Insurance for COVID-19, THE NATIONAL LAW REVIEW, https://www.natlawreview.com/article/business-interruption-insurance-covid-19.

⁸ Coronavirus Disease (COVID-19), supra note 1.

⁹ Id.

¹⁰ Coronavirus Disease (COVID-19), supra note 1; Joseph A. Ziemianski, et al., supra note 3.

¹¹ Coronavirus Disease (COVID-19), supra note 1.

¹² Id.

¹³ Id.

¹⁴ Coronavirus Disease (COVID-19), supra note 1.