Coronavirus Claims Denials

One type of insurance coverage not often discussed is business interruption insurance. Also known as business continuity insurance, this type of coverage – just like any other type of insurance coverage – is determined by the language of the policy itself.

In order to make a determination of whether business losses caused by the current Covid-19 pandemic, insureds must look at the policy itself, including its terms and definitions, to find out if they have this type of coverage.

Language related to the business interruption coverage can often be found in the property/casualty policy or a comprehensive package policy, and possibly added as an add-on or rider.

The language may include a list of covered perils/risks/hazards such as theft, fire, wind, lightning, etc. which are likely not going to be helpful to a business-facing losses as a result of the coronavirus. The language to keep an eye out for when determining whether business interruption insurance covers Covid-19 losses include: government actions, interruption by civil or military authority, civil authority, and similar language. It is unlikely a policy will specifically include language related to pandemics or other outbreaks but if the aforementioned language is included Coronavirus losses will likely be covered.

Unfortunately, insurance carriers throughout the country have already started to line up to deny paying for this coverage for a number of businesses, including restaurants, seasonal businesses, and many others. These denials are occurring where coverage for government actions or similar language exists and businesses are under emergency declaration orders to shut down. For example, the City of Key West issued a directive in which this language was included. Hillsborough County’s Order also included this language. The City of New York’s Order, too, includes this important language.

One of the reasons the insurance carriers are giving for the denial of some claims is the lack of property damage, which the language of some policies require before a claim can be paid out. Fortunately, some localities have included this important language in their orders, which will improve the chances that the claims’ denial is ultimately reversed.

The mere fact that an insurer has denied a claim does not itself mean coverage doesn’t exist for Coronavirus related losses. In fact, an initial denial of coverage may be standard business practice by many insurance carriers. After the denial, an experienced insurance coverage attorney will be vital to review the denial and the facts surrounding the claim. An attorney may need to determine, for example, whether the use of the word “loss” in a policy could trigger coverage due to a loss premises use. Our attorneys at Fulgencio Law, PLLC are extremely well-versed in the area of insurance coverage and can help you if a claim has been denied, or help with making the initial claim so that it is centered around the language of the policy of insurance, increasing the chance that it is not denied.

If your business has sustained losses during the Coronavirus (COVID-19) emergency and you been denied coverage, or are trying to determine whether coverage exists, please call us at 813.463.0123 to schedule a free consultation.