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Only Courts Can Decide if COVID-19 Chaos is Included Under Business Interruption Coverage

Client Alert
April 21, 2020

Despite paying insurance premiums for years, businesses are now being told by insurance companies and brokers that the business interruption coverage in their policy does not apply to coronavirus losses. However, the question of whether business interruption coverage extends to losses caused by the current pandemic will ultimately be answered by the courts, not insurance carriers. These legal decisions will depend upon the specific language of the policy and the facts and circumstances surrounding the claim. For more information on the specific issues regarding business interruption coverage claims, please see the prior guidance provided by BMD here.

Lawsuits are being filed in Ohio and many other states to challenge coverage denials based on coronavirus losses. Insurance companies will vigorously defend these claims at all stages, including at the pre-suit claim level. Currently, insurance carriers are  requiring businesses to submit substantial documentation after a proof of loss has been submitted. Intentional or not,  requiring businesses to submit substantial documentation, including proof that the coronavirus was present at their location, will likely dissuade a number of businesses from asserting claims and lessen the number of lawsuits challenging coverage denials.

While there are legislative efforts to provide business interruption coverage to small businesses in Ohio and other states, the legislative process will take time, and the outcome is uncertain.

In the interim, what should be businesses being doing to preserve their rights to pursue relief under their insurance policies? Business should:

  1. Request copies of all insurance policies from brokers or directly from insurers. While business interruption coverage concerns the property coverage included in almost all commercial policies, other coverages may exist and apply, depending upon the industry.

  2. Gather documentation to support any coronavirus insurance claims that the business intends to assert. The type and nature of documentation will largely depend upon the business involved. For example, restaurants, bars, movie theaters, salons, and fitness centers in Ohio should obtain a copy of the pertinent order shutting down their establishments. Businesses should also gather all financial documentation demonstrating losses from the shutdown or earlier, depending upon the circumstances.

  3. Consider filing a proof of claim to preserve the rights of the business under the insurance policy. While this can be done independently, many businesses would benefit from discussing this option or obtaining assistance from insurance brokers or legal counsel to submit a proof of loss or claim in accordance with the terms of the insurance policy.

  4. Consult with legal counsel about insurance policies and whether coverage may exist for coronavirus losses. Not all policies include the same language or exclusions. Furthermore, this issue is developing based on the arguments and opinions adopted by Courts in Ohio and other states. It will be important to discuss with counsel how to substantiate a claim and the options for pursuing claims in Court. Finally, given the multitude of legal issues presented by the novel coronavirus, businesses should also discuss their current policies and potential insurance needs.

Businesses should not be discouraged by the multitude of articles disseminated by the insurance industry over the last month to dissuade businesses from filing coronavirus claims. Insurance coverage is always dependent upon the language of the policy and the facts and circumstances surrounding the claims as presented. The courts, not the insurance industry, decide whether coverage exists. For this reason, it is important to be proactive now to preserve your rights and know your options.

For more information, please contact Kyle A. Johnson at kajohnson@bmdllc.com or 330.374.7475 or Hal DeSaussure at hdesaussure@bmdllc.com or 330.436.8914.

COVID-19Business InterruptionClaimsCoverageCoronavirus Lossesinsuranceinsurance coveragecoverage denialspre-suit claim levelcommercial policiescoronavirus insurance claimsproof of claim
Client Alert

Vacating, Modifying or Correcting an Arbitration Award Under R.C. 2711.13: Three-Month Limitation Maximum; Not Guaranteed Amount of Time

June 8, 2021In a recent decision, the Supreme Court of Ohio held that neither R.C. 2711.09 nor R.C. 2711.13 requires a court to wait three months after an arbitration award is issued before confirming the award. R.C. 2711.13 provides that “after an award in an arbitration proceeding is made, any party to the arbitration may file a motion in the court of common pleas for an order vacating, modifying, or correcting the award.” Any such motion to vacate, modify, or correct an award “must be served upon the adverse party or his attorney within three months after the award is delivered to the parties in interest.” In BST Ohio Corporation et al. v. Wolgang, the Court held the three-month period set forth in R.C. 2711.13 is not a guaranteed time period in which to file a motion to vacate, modify, or correct an arbitration award. 2021-Ohio-1785.Client Alert

EEOC Provides Updated Guidance Regarding Employer COVID-19 Vaccine Policies

June 3, 2021On May 28, 2021, the U.S. Equal Employment Opportunity Commission updated its guidance regarding employer COVID-19 vaccination policies. The new guidance provides much-needed clarification of expectations for employers seeking to promote workplace safety and prevent the spread of COVID-19, including discussion of mandatory vaccination policies, voluntary vaccination incentives, and accommodation of employees based on disability or sincerely held religious beliefs. The full text of the update is found in Section K of the EEOC’s COVID Q&A document. You can also learn more about these and other developments from BMD's Bryan Meek and Monica Andress through the Employment Law After Hours YouTube channel, available here.Client Alert

What Telemedical Barriers Practices Face and How They Can Manage Them

May 28, 2021The onset of the COVID-19 pandemic has led to many businesses and industries having to rapidly adapt new practices in order to stay profitable, and the healthcare industry is no exception. Although telehealth tools and practices have existed and been used since the Vietnam War, the pandemic has caused many individual healthcare practices to heavily rely on telehealth as a large portion of their service mix in order to continue to provide care for patients. Because of this rapid adoption of telehealth practices in order to combat the restrictions of COVID-19, the telemedicine industry’s revenue has exploded in the last year. Experts predict that telehealth will continue to grow in use beyond the current pandemic, estimating the industry’s worth to be $25 billion by 2025. However, this rapid adoption of telehealth was prompted out of need and has not been without its own barriers that practices now face.Client Alert

Which Entity Should I Form When Starting a New Business?

May 21, 2021As a tax law attorney, friends and acquaintances ask me this question all the time: what type of entity should I form when starting a new business? With many business options available it can be confusing determining which business structure would be appropriate. Below is a general overview of each business structure and the tax responsibilities of each.Client Alert

IMPORTANT UPDATE: IRS Opens Portals for Advanced Child Tax Credit Payments 2021

May 20, 2021The American Rescue Plan Act (the “Act”) expands the Child Tax Credit for tax year 2021. In addition to expanding the Child Tax Credit, the Act provides for advance payments of the 2021 Child Tax Credit. Beginning in July, the IRS will automatically send Advanced Child Tax Credit payments to eligible taxpayers based on their 2020 tax return (or 2019 tax return if the 2020 tax return has not been filed and processed yet). The amount of the advanced payment will be up to $300 each month for each qualifying child under 6 years old at the end of 2021 and $250 each month for each qualifying child between 6 and 17 years old at the end of 2021. For example, if you have 2 qualifying children, one 4 years old and one 8 years old, you may receive up to $550 each month in advance child tax credit payments.
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