We’re Monitoring COVID-19’s Impact On Businesses. Here’s the Latest.

It’s been well over a year since the global pandemic brought many businesses to a halt and forced others to find new ways to keep operating. The financial impact has been devastating for some sectors. And while the vaccine rollout is promising, we’ll be dealing with the financial fallout for months and years to come. For instance, some experts say the New York hotel industry won’t return to normal occupancy rates until 2025. 

And businesses that have remained open are incurring additional costs to deal with the fallout from the virus. For instance, if one of your employees tests positive for COVID-19, you may need biohazard cleaning to safely remove contaminated materials from your property.

How business interruption insurance can help with COVID-19 claims

Even with the relief programs offered by the government, your business may need more support getting through the crisis. Depending on your insurance coverage, those funds may not cover all of your losses. If you have business interruption insurance (whether standalone or as part of your property coverage), you may be able to recoup some of your losses from your insurer. 

It’s a tricky situation, since most business interruption policies are intended to be used in case of an event like a fire or natural disaster, not a global pandemic. These policies are intended to cover lost revenue caused by physical damage to your property. Since COVID-19 hasn’t resulted in any physical damage, it’s hard to know if your business is covered, and how much. 

However, it’s not hopeless. For example, there is a Civil Authority Clause in many typical business income coverage or business owners policy plans. If your losses were caused due to government-mandated shelter-in-place orders, you may have a valid claim. As of right now, insurers are looking at each claim on a case-by-case basis. 

COVID-related insurance claims go to court

The pandemic is new territory, even for the insurance companies. At this stage, we’re starting to see how insurers, claimants, and the courts are handling coronavirus-related claims. According to the University of Pennsylvania’s Covid Coverage Litigation Tracker, more than 1,500 business interruption lawsuits have been filed by business owners seeking additional relief from their insurance companies. So far, insurance companies have won 243 cases, compared to only 52 wins for claimants. 

One notable case is that of Caesar’s Palace, which is seeking $2 billion in damages from various insurers. The hotel and casino is claiming that the insurance companies’ all-risk policies didn’t explicitly exclude virus coverage, so they should pay for their claims. While it will take some time to settle that suit, there is one settled lawsuit that should give business owners hope. 

An Ohio restaurant group closed its locations shortly after the pandemic began, suffering significant losses as a result. After an initial denial, the restaurant group sued its insurer, with its attorneys focusing on the policy language which stipulated that coverage was provided in the event that there was “direct physical loss of or damage to property.” The claimant’s attorneys argued that the restaurant group suffered from a loss of property due to government mandates, and the judge agreed. 

Cases like these offer some hope, even though the numbers make it seem like the odds are stacked against the insured.