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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

Ramping Up – A Quick Guide to Pressing COVID-19 Employment Law Issues

November 19, 2020As the country continues to grapple with a global pandemic that now seems to be never-ending, businesses everywhere are waking up to realize that the calming of the COVID-19 employment issues over the summer has come to an end. As cases rise exponentially in all 50 states as we head into the winter months, the number of employment issues related to COVID-19 will also increase dramatically. For these reasons, it is important that we return to the employment law basics that were covered this prior spring, while highlighting the many lessons we have learned along the way. As COVID-19 matters and concerns continue to hinder the working environment of every business, it is important that you reference this review to guide you through these tough issues and questions.Client Alert

Your Workplace Under Biden

November 9, 2020This is my favorite recurring post – Predictions of How a New Administration Will Affect Your Workplace. Four years ago, we accurately called the emasculation of the 2016 proposed FLSA Overtime Rules (the salary exemption threshold was set at $35,568 in 2019, rather than $47,476 as proposed), we forecasted a conservative shift of the NLRB and its results (a roll-back of employee rights, social media policy evaluations, and joint employer rules), and we nailed the likelihood of multiple conservative appointments to the United States Supreme Court and its long-term effects (although I completely failed to predict that my ND classmate Amy Coney Barrett would fill the final vacancy during the Trump administration). This time, the L+E Practice of BMD has decided to make it a group effort at predicting what will happen, what probably happen, and what might happen under President Biden. As always, please save this in your important files and pull it out four (or eight) years from now to judge our accuracy.Client Alert

HHS Provider Relief Funds Reporting Requirements: Important Updates Every Provider Should Know

November 4, 2020HHS continues to revise its reporting requirements for the use of the Provider Relief Funds. Providers with more than $10,000 in Provider Relief Fund payments must report on the use of the funds through December 31, 2020. The reporting window will begin on January 15, 2021 and providers must complete reporting obligations for FY 2020 by February 15, 2021 through a portal designed by HHS. However, providers that have unexpended funds as of December 31, 2020, will have an additional 6 months to use the remaining funds through June 30, 2021. These providers must submit a second and final report no later than July 31, 2021.Client Alert

Should I Apply for Phase 3 Funds? Important Considerations Every Provider Should Know

November 2, 2020On October 1, 2020, the Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers through a Phase 3 distribution. Importantly, providers that previously received HHS Provider Relief Funds or already received payments of approximately 2% of annual revenue from patient care are eligible to apply. Eligible providers have until November 6, 2020 to apply for these Phase 3 Funds. However, the question from providers continues to be: Should I Apply for Phase 3 Funds?Client Alert

CISA Ransomware Practices

October 29, 2020On October 28, 2020, the United States Cybersecurity and Infrastructure Security Agency (CISA) issued an alert warning of imminent threats to US hospitals and healthcare providers. The specific threat involves RYUK Ransomware attacks. RYUK is a novel ransomware that goes undetected by commercial anti-virus/malware detection programs. Once deployed, RYUK encrypts all data and disables systems. In short, it cripples all functionality down to phone systems and automated doors. Healthcare providers should alert their employees to remain hyper-vigilant and report any suspicious activity seen in email or on networks. It has been reported healthcare providers in New York, Pennsylvania and Oregon have been targeted in the last 48 hours. If your organization encounters issues, BMD can assist in mobilizing a response team and has contacts with forensic IT firms that are familiar with RYUK. It is advisable to engage professionals with experience dealing with this specific threat.
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