Early this year, a coronavirus pandemic few of us could have ever predicted turned our nation upside down. The COVID-19 outbreak dampened consumer and business activity across the globe. On April 2, Florida’s Governor Ron DeSantis issued a statewide stay-at-home order, resulting in devastating financial losses for many otherwise successful Florida businesses.
In response, concerned business owners have sent us numerous questions regarding COVID-19 business interruption insurance claims. With their concerns in mind, we have consolidated answers to the 10 most common questions below. You can find more details on how to collect compensation for business losses due to coronavirus in our free eBook, “Guide to Florida Insurance Bad Faith Lawsuits.”
1. How does COVID-19 impact Florida businesses?
Coronavirus has altered the lives of Florida residents and businesses in innumerable ways. However, there are two significant ways the COVID-19 pandemic is impacting Florida businesses.
One, companies that have chosen to take the government’s advice and shutter for several months to help prevent the spread of coronavirus could face overwhelming profit losses.
Second, those businesses and essential services that remain in operation could face a deluge of consumer complaints. For example, customers may claim that business failed to enforce mask-wearing or social distancing – causing them or their loved ones to be infected with COVID-19.
2. What types of Florida businesses does COVID-19 affect most?
Here in the Sunshine State, especially across the more popular tourist spots of Fort Lauderdale, West Palm Beach, Miami, Hialeah, Cape Coral, Coral Springs, Port Saint Lucie, Marathon, Pembroke Pines, Key Largo, Pompano Beach, and Miramar, spring and summer month shutdowns mean significant, unexpected losses for tourism and hospitality companies.
Many Florida hotels, amusement parks, bars, retail shops, salons, gyms, restaurants, entertainment venues, and medical centers require uninterrupted cash flow to cover ongoing expenses and continue employing and serving the public. Due to government coronavirus recommendations and mandates, many companies in these industries have had to reduce their workforce or shut down permanently.
Coronavirus shutdowns have had a severe effect on Florida construction industry contractors. The inability to promptly complete projects can potentially trigger performance bonds and payment bonds in both state and private projects – often resulting in costly litigation.
3. What does COVID-19 business interruption insurance cover?
Florida business interruption insurance policies help defray profit losses, relocation expenses, loan payments, back employee pay, and other financial damages resulting from the inability to operate a business due to a covered event. Certainly, closures or unexpected operational complications caused by customer injury, property damage, or government action may trigger the filing of a claim.
In addition to profit losses, business damages related to COVID-19 may include:
- Security expenses
- Sanitization costs
- Rent and mortgage payments
- Lease payments
- Inflated advertising expenses
- Costs of providing electronics and equipment for employees working from home
4. Why do insurers deny COVID-19 business interruption claims?
Florida business owners pay thousands of dollars in exchange for the security that business insurance policies offer. When problems arise, they expect to be protected. Yet, every day we hear from Florida businesses who say that their insurance and business interruption policies won’t cover COVID-19-related claims.
Unfortunately, in anticipation of a flood of COVID-19 related business interruption claims, insurance companies are resorting to blanket claim denials that are not based on the specifics of individual policies. This is no surprise.
Since insurers face enormous stakes, they have a variety of excuses for rejecting COVID-19 business interruption claims. Some insurers have consequently denied rightful COVID-19 business interruption claims, arguing that government-ordered shutdowns are outside of their coverage, that pandemic outbreaks are “uninsurable,” and that being forced to pay such claims threatens their ability to cover “legitimate” claims.
Other common arguments for coronavirus insurance claim denials include:
- Business interruption policy was intended to cover physical damage only
- Business interruption policy was inadequately priced for infectious agent outbreaks
- Such a policy would not have been provided at this rate had it covered virus pandemics
5. Can policyholders fight COVID-19 business insurance claim denials?
Despite the current widespread rejections of coronavirus business loss insurance claims, Florida policyholders should not automatically take their insurer’s word for it. Government-ordered shutdowns are precisely the types of events that certain business interruption insurance policies may cover.
To help level the playing field between insurer and policyholder, Florida law specifically favors the policyholder when a policy term is unclear or subject to multiple meanings. Any ambiguity, vague language, or general blanket statements regarding coverage, intent, or exclusions within the policy is interpreted to promote coverage – a practice that gives Florida policyholders a leg up fighting illegitimate claim denials.
Florida business owners should confer with experienced insurance coverage attorneys to evaluate bringing COVID-19 business interruption lawsuits and class action claims scrutinizing improper claim denials. Insurance companies who refuse to pay benefits in a manner inconsistent with their policy terms may be sued for bad faith activity.
6. Who can file a COVID-19 business interruption lawsuit?
Policyholders who have been denied benefits for COVID-19 related losses, whether the policy specifically mentions business interruption coverage or merely implies it, may be eligible to file a claim for benefits. If a coronavirus insurance coverage claim is wrongfully denied, it can be escalated to a lawsuit for compensation.
For example, insurers may argue that because coronavirus caused no property damage or direct physical loss of property, you do not deserve business interruption or business loss benefits. However, you may be able to argue that contaminated property is “physical damage” successfully.
In previous lawsuits involving microbe contamination, courts have held that a policyholder deserved benefits to cover business income and expenses due to the bacterial contamination that could render their building useless or uninhabitable.
Whether you can establish that contamination was present should not be the primary focus. Certainly, the government and the general public assume the virus’ presence when demanding business shutdowns and issuing stay at home orders. Thus, the virus has impacted the property in such a way as to prevent it from being used for its intended purpose.
7. Are COVID-19 insurance policy exclusions enforceable?
The 2002–2004 SARS outbreak prompted the Insurance Services Office (“ISO”) to create a specific exclusion relating to certain bacteria or viruses, modeling these contamination exclusions after the existing environmental pollution exclusions. In 2006, ISO recognized that viruses and bacteria could cause “physical loss of or damage to” property.
Today, many business insurance policies contain these relatively new exclusions – which serve to safeguard the insurer against enormous potential payouts such claims would cost them.
However, not all policies contain this exclusion, and certain ambiguities in the language have not yet been judicially interpreted. Just because a policy contains such an exclusion DOES NOT mean the insurance company is correctly applying it or that other policy language may still provide coverage. An experienced insurance coverage attorney can assist with assessing your policyholder rights to collect insurance for COVID-19 related losses.
Even if your business insurance policy includes some type of disease exclusion, your policy’s precise language will determine whether you may be covered for COVID-19 related damages. Remember that insurance exclusions are typically interpreted narrowly, and ambiguities favor the policyholder.
8. Do civil authority clauses cover COVID-19 claims?
Many business insurance policies include civil-authority clauses. These clauses activate when loss or damage results from government action preventing, impairing, or prohibiting business operations. Courts have interpreted this clause to activate when an action or order from a civil authority interrupts business resulting in financial loss. How the courts will interpret these clauses in the context of COVID-19 related claims will certainly be a pressing topic in many pending insurance coverage lawsuits.
9. Can I file a COVID-19 lawsuit if I’m already part of a class action case?
Florida policyholders may file or join class action cases against insurers who have denied coronavirus coverage improperly regarding business interruption losses in a blanket fashion. Note that if a class action case has been filed against your insurer, you can still file an individual action against that insurer to collect compensation or participate in any relief ultimately awarded to the class members.
10. How do I file a COVID-19 business interruption claim?
COVID-19 business interruption lawsuits are incredibly complex, and these claims involve complicated analysis of insurance policy terms, definitions, and exclusions. If your COVID-19 business interruption claim has been denied, the vital first step is to speak to an experienced business interruption litigation lawyer. A skilled attorney will be able to examine the language in your policy, determine whether you are eligible to file a claim against your insurer, and describe the financial compensation available.
Don’t let financial concerns stop you from getting this valuable legal advice. Established business litigation attorneys are willing to review these cases free of charge and many work on contingency, which means you do not pay for legal services until and unless you win your case.
Should you choose to pursue a claim against your insurer, a skilled attorney will ensure you meet all procedural deadlines, investigate your claim and gather necessary evidence, and construct a solid, persuasive argument to support your case and maximize your compensation.
Those who have not yet filed a claim for business interruption insurance benefits are encouraged to contact a skilled business litigation attorney who can determine what COVID-19 interruption coverage should be available according to the language of the policy.
Policyholders affected financially by the COVID-19 pandemic should gather policy-related documents and business records, establishing expenses and changes in revenue to aid the investigation. It is also advisable to keep a detailed log of emails, phone calls, and other communications with your insurance company.
It is difficult to know how insurers will handle the inevitable COVID-19 claims they will face. However, policyholders who have faithfully paid premiums deserve rightful coverage. You can prepare in advance by reading our free eBook, “Guide to Florida Insurance Bad Faith Lawsuits.”
You can also learn more by having an experienced Florida insurance coverage attorney examine your insurance policy for interruption coverage and explain what your policy language states. Your attorney can help you create a plan to protect your interests, including ensuring your business insurer fulfills their obligations in response to a claim.
Author: Cristina Pierson
Cristina Pierson is a board certified business litigation specialist with the Law Firm of Kelley | Uustal. She represents policy holders who have filed lawsuits against insurance companies who have wrongfully denied their benefits or underpaid on their claims