• Business owners have paid premiums to their insurance companies to cover, among other things, losses associated with a shutdown or limited operations of their businesses. This is routinely referred to as business interruption coverage.
• Across the board, insurance companies are denying business interruption claims for a variety of reasons.The insurance policies are long and convoluted, but also vague and subject to interpretation by the courts.
• Our firm has reviewed hundreds of policies and insurer denial letters, so we are well versed on the policy language and the insurers’ positions.
• For many policy holders, we believe we can assist them in pursuing claims against their insurer for denial of coverage for losses associated with Covid-19 shutdowns.
• Our firm works on a contingency basis, meaning the client pays nothing in attorneys fees or expenses, unless there is a recovery.
• Our firm has represented thousands of policy holders on coverage claims on other matters in the past.
• Our firm is not pursuing this as a class action, which means that we review each policy and will handle each claim on an individual basis.
• If you wish to talk further, please contact our office (713) 223-5393 or by email at firstname.lastname@example.org. A representative will promptly respond.
All over America, businesses are struggling to survive as a result of the fallout from the Covid-19 virus. Many of these businesses purchased and paid premiums for what are known as “all risk” insurance policies, but few if any claims are actually being paid by insurance companies. Many of these businesses specifically purchased what is known as “business interruption” insurance, and “civil authority” insurance—both of these types of insurances are supposed to provide coverage for losses as a result of a business interruption, or in the event that losses result from action by the government. It has become clear that the insurance companies have made a corporate decision to deny virtually all claims related to Covid-19. No doubt this is being done because literally hundreds of billions of dollars hang in the balance. Without court intervention, it is unlikely that insurance companies will in fact pay for losses that are actually covered. Here is what you need to know:
The insurance policies and key issues.
Most commercial policies purchased by businesses are known as “all risk” policies. Just because you did not specifically purchase what is known as “business interruption” insurance, does not necessarily mean that you do not have a claim as a result of the Covid-19 fallout. You need to have a legal professional review your policy to see if coverage is available, and what arguments can be made in favor of coverage.
When analyzing the issue of whether a loss is covered under an insurance policy, courts typically liberally construe coverage—meaning, courts take the view that insureds (policy holders/business owners) are paying for something meaningful. Thus, courts typically resolve close calls or doubts in favor of coverage. Again, as said below, simply because the words “business interruption” or other like words do not appear in the policy, does not necessarily mean that there will ultimately be no coverage. The rule generally is as follows: In the absence of an applicable exclusion — which insurers have had available to add to property policies since 1986 — the strong implication in an “all risk” policy is that losses resulting from COVID-19, if not expressly excluded, are thereby covered.
Insurance policies are typically replete with multiple coverage exclusions and endorsements. These must be carefully analyzed and the claim must be made pursuant to the policy and endorsements, while avoiding a trigger of the exclusions. For example, because there have been virus outbreaks in the past, many insurance policies now have policy exclusions for viruses. When a claim is made seeking lost business revenues as a result of Covid-19, the insurance company may take the position that the claim made in that manner triggers the virus exclusion. Courts interpret exclusions very strictly. Thus, it could be argued that the insured’s losses weren’t actually a result of Covid-19, but instead were a result of the government’s actions in response to Covid-19, or even the public’s reaction. These are issues best left to a legal professional to ensure that the proper claim is made.
One of the key issues that will likely be the MOST litigated as a result of the Covid-19 crisis is whether business owners have suffered a “direct physical loss” or “property damage” as a result of Covid-19. Many times policies frame coverage, no matter the type, on one of these phrases. It is already clear that the entire insurance industry has decided to fight these claims primarily on this issue. The insurance company will contend that Covid-19 has done no damage to property, and no property has been lost. We will argue, of course, that whether it be due to the virus contamination itself, the public’s reaction to it, or the government’s closing or restricting business, losses have in fact occurred as contemplated by the policy. Our firm has handled thousands of insurance cases; it is our view that policy holders/businesses can make a formidable argument, backed by multijurisdictional case law, that COVID-19 constitutes “physical loss or property damage” sufficient to trigger business interruption coverage, with full policy limits.
Although there are many similarities, every insurance policy will be different. Some businesses have multiple policies, and all or none may provide coverage for Covid-19 losses. The key is to have a legal professional review the policy language. Whether you have business interruption insurance, specific insurance that triggers due to government intervention (“civil authority), specific insurance that provides virus/bacteria/fungus coverage, or a basic “all risk” policy, a thorough review is needed. Note, that although many agents are helpful and will help advocate for you on your claim, ultimately, if the claim is denied, you will need a legal professional for assistance. Of course, there is the usual caveat: It is critical to review the policy language.
General Principles of Policy Interpretation
While the laws of each state may differ, the following are some general and consistent rules for interpretation of an insurance policy:
• Plain language governs. Courts look first to the plain language in the policy to give effect to the intention of the parties.
• Ambiguity is construed in favor of coverage. If policy language is found to be ambiguous, a court will construe the issue in favor of coverage (also called the rule of contra proferentem). The tie goes to the runner.
• Exclusions must be narrowly construed. The insurer has the burden to show that a claim falls within exclusionary language, which is construed narrowly against the insurer.
What is your first step?
As stated, it is always best to seek assistance when making an insurance claim, especially those related to Covid-19. But, for those who want to attempt, at least at first, to go it alone, here are the recommended steps:
1. Collect all potentially applicable policies; this may require you contact your agent to obtain a copy of the policy, and all applicable endorsements and exclusions.
2. Attempt to quantify your gross and net losses;
3. Make your claim on each policy in writing, in the method and manner set forth in the policy; provide supporting data as requested.
If there is a virus exclusion and you believe your losses are actually a result of something other than virus contamination in your business, note that and make sure to make that clear;
If you have coverage related to government intervention, make it clear that your losses are result of government action.
4. If (when) your claim is denied, that is NOT the final word. Seek assistance from a legal professional well-versed in pursuing insurance claims.
At this point, once your claim is denied, a lawyer you choose will more precisely calculate your past net losses and future net losses, and make a formal demand. After an appropriate time, the lawyer will then file suit for breach of contract, seeking not only compensation for the insured’s losses, but also attorneys’ fees and costs. The litigation process typically takes fourteen months to compete. Your claim would not be pursued as a class action; rather, your claim would be pursued individually to maximize its value.
Who is The Buzbee Law Firm?
The Buzbee Law Firm has been in business for more than twenty years and has successfully handled thousands of claims for policy holders against their insurance companies, to include being lead counsel on the landmark $193 million settlement for policy holders against Texas Windstorm Insurance Association. Tony Buzbee has been named “Attorney of the Year” by Texas Lawyer Magazine, as well as being named a “Super Lawyer” and Best Lawyer in America for many years in a row. The New York Times described Buzbee as “one of the most successful lawyers in the country.”