Does Your Business Interruption Insurance Coverage Apply to COVID-19 Losses?
As most Michigan business owners are aware, Governor Whitmer’s “Stay at Home Stay Safe” executive order and related federal guidelines have had a dramatic impact on the concept of “business as usual.” Most prudent business owners guard against a variety of risks through insurance products. This often includes business interruption insurance covering situations that most of us presumed would never occur.
Check Your Policy’s Language
We are facing a generational circumstance in the coronavirus pandemic, which has caught us all off guard. Whether a business interruption insurance claim or loss is ultimately covered will be determined by the facts related to the specific claim and the terms and conditions of the insurance policy. In particular, your coverage may include property insurance policies with communicable disease and interruption by civil authority clauses and business interruption policies that often include interruption due to property losses.
As COVID-19 and its impacts expand in Michigan, Kreis Enderle continues to advise various business clients experiencing or expecting some type of interruption or financial consequence. Unfortunately, the insurance industry is not yet well equipped to respond to the unique situation we all are currently facing. Often, business interruption coverage may require direct physical damage to an insured’s property. Anecdotally, at this time, insurance companies do not appear to recognize contamination as a direct physical loss.
The circumstances surrounding COVID-19 is fluid. Relief for businesses is being discussed at both the federal and state level and within the insurance and legal industries. We are monitoring these developments to help you navigate through this difficult period.
How You Can Prepare and Preserve Your Business Interruption Insurance Claim
We recommend you maintain records of the COVID-19 coronavirus’s financial impact on your business and document the following:
- Do your workplace, customers, or suppliers have a known COVID-19 infection or contamination?
- Is your business workplace or any of your employees presently under quarantine?
- Has your employees’ ability to work been affected because of illness, quarantine, or inability to commute to work?
- Is your business associated with a forced closure, or are you unable to provide services due to government order?
- Are you unable to deliver goods or services or meet contractual obligations?
Until state and federal relief guidelines are more clearly delineated and understood, it is essential to document the steps you are taking to maintain revenue, control costs, and keep losses from escalating. You should also review the terms of your insurance coverage to better understand any potential claim you may have.
We encourage you to visit our COVID-19 Resource Center to learn more about federal and state programs available for homeowners, business owners, and non-profit corporations economically impacted by the pandemic.
We Are (Still) Here to Help
If you have questions about insurance or other issues resulting from the COVID-19 pandemic and Michigan’s shelter-in-place restrictions, the attorneys at Kreis Enderle remain available to counsel you. We are working remotely during the crisis and can conference with you by telephone or video. Please contact Mark Kreter or Mike Toth at (269) 966-3000.