By: Michael Lambert
March 20, 2020
With the incredible disruption to businesses, large and small, executives across the country are scouring their insurance policies to see if the premiums they have been paying for years might have been worth it. Business interruption insurance, trade disruption insurance and civil authority coverage may all provide some degree of coverage for losses incurred as a result of the Covid-19 crisis.
Each policy contains different coverages and exclusions, and each company will treat its insureds differently depending on the particular circumstances. Most insurance companies will be quick to deny claims, even where coverage may be arguable, but businesses are already preparing for battle. The first lawsuit for business interruption coverage due to the contamination of insured property has already been filed. Trade groups are proposing legislation that would take the extraordinary step of voiding particular exclusions in the insurance contract between businesses and insurers. The landscape is changing on a daily basis.
In addition, companies may face third-party claims from shareholders for economic loss and from employees for bodily injury stemming from the Covid-19 crisis. This may trigger coverages under D&O and general liability policies and potential policy exclusions will become the battleground in coverage disputes.
Timing is critical for several reasons. Companies have an obligation to timely report a loss and a duty to cooperate. Determining potential coverage and forming a claims strategy in advance of notifying the insurance company is critical. Moreover, the insurance industry will quickly consolidate their positions against a barrage of claims. Consulting with our team of insurance coverage attorneys is the first step in figuring out whether the ongoing losses occasioned by Covid-19 will be covered by insurance.