The comments, posts, and articles about whether property insurance coverage benefits will exist are all over the place on the internet. An example of two opposing views come from Georgia’s Insurance Commissioner versus the advice from United Policyholders.
Amy Bach is the extraordinary consumer advocate leading the largest policyholder advocacy group in the United States, United Policyholders. United Policyholders posted an article, Can businesses rely on insurance to overcome COVID-19 losses, which answers the question every business owner is asking:
The short answer is, for many it will be a fight. Bottom line: Don’t take no for an answer until you’ve exhausted all arguments and avenues for help. And there are many of them.
So, let’s change the venue to Georgia. There, the elected officials watching over the insurance companies—and hopefully watching out for policyholders—filed a bulletin. Here is what it says:
Virus and Disease
Viruses and disease are typically not an insured peril unless added by endorsement. Most policies generally exclude loss caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease.
Civil Authority Coverage
Civil Authority coverage is additional coverage that may be purchased as a part of a business’s business interruption or business income coverage. These policies may include coverage for losses caused by the forced closure of property by a civil authority. This coverage typically applies when an insured is unable to access its property due to a government order as a result of physical damage to adjacent or nearby property. Accordingly, these types of coverage typically require physical damage to property to be triggered. If the policy requires physical damage to adjacent or nearby property and the insured cannot establish a causal connection between the government order and that physical damage, then there likely will be no coverage.
Following September 11, Hurricane Sandy, and other disasters, insurers tightened policy language to make clear that property damage was a requirement for coverage.
Insurance Industry Response to Coronavirus Standard business interruption policies typically exclude viruses and bacteria and/or communicable disease. However, in response to past outbreaks, some insurers developed specialty insurance to respond.
The Georgia Department of Insurance became aware that in early February 2020, Insurance Services Office, Inc. developed two new endorsement forms relating to business interruption insurance and COVID-19. These forms provide coverage for actual loss of business income and extra expenses ·caused by a government order closing the insured’s premises or quarantining all or part of the premises and from government suspension of some modes of public transportation. If dependent properties are included in the coverage, such as a supplier’s or customer’s premises, then the coverage applies to the dependent property as well. The forms were not filed with the Georgia Department of Insurance and will not be added to ISO’s form portfolio.
Wow! Not exactly a report to the policyholder optimist club. At least United Policyholders suggests a claim should be made and arguments for coverage advanced.
The one thing I can predict with certainty is that policyholder lawyers working in big firms on an hourly basis are going to line up to represent commercial clients and make “creative” arguments for coverage. They will have nothing to lose by providing an opinion offering “hope” in return for work. Some will even say how they won similar cases in the past.
Those of us full-time in the first-party policyholder recovery business know this is going to be a dog fight at best. There are a lot of proof of damage requirements, and the facts are still developing. Every policy is different; so, the first lesson is what I suggested in Bill Wilson Teaches How To Argue For Coverage at NAPIA—What is RTFP? Get the policy and read it.
Before learning all the myths about these coverages and what some “big shots” have allegedly accomplished in the past, it all starts with reading the policy and then applying concepts and facts that we have been teaching for quite some time in this blog.
I will keep presenting new thoughts on this topic on a daily basis. We all can learn if we spend time and follow the basic coverage interpretation process.
Thought For The Day
God knows when the end of time will come, not some fanatic… The world will end someday, but the end of the world and the end of time are two different things.
How About a Little REM for a Video Song Of The Weekend?