The coronavirus pandemic has forced American businesses to a skidding halt. With nationwide quarantines and closures, COVID-19 has jeopardized the very existence of many businesses. In California, Governor Gavin Newsom has implemented aggressive social distancing measures, including a “Stay-at- Home” order, which prohibits all public and private gatherings of any number of people occurring outside a household. The impact this is having on most businesses is disastrous.
With businesses struggling to stay afloat, many are turning to their commercial property insurance policies. In addition to providing coverage for other losses, these policies often provide coverage for “Business Interruption.” There are a few predominant features that merit discussion, however, coverage varies based on policy language. Although it may be reasonable for business owners to expect coverage for the COVID-19 pandemic, they will certainly encounter challenges. Business interruption insurance is technical and complex. The policies are riddled with ambiguous terms and vague promises. Calculating business losses can be complicated and entail a variety of limits. Naturally, the claims are often underpaid or denied. Still, it would be prudent for business owners to file their claims promptly and not be deterred by intimidation tactics.
Most commercial property insurance policies require some form of “physical loss” in order to qualify for business interruption benefits. Predictably, insurers will tell business owners not to bother filing a claim due to COVID-19, due to this requirement. We do not believe this interpretation is correct. We would encourage business owners to file their claims and consult a lawyer when they meet resistance from their insurers. The survival of many businesses may depend upon it.