Almost all businesses are struggling in one way, shape, or form with the current crisis caused by the COVID-19 pandemic. There are a number of issues facing business both big and small – reduced capacity, loss of rental income, decreased or loss of business revenue, and, in some cases, a total stop in business operations. While some companies were fortunate to receive a loan through the federal government’s Paycheck Protection Program, many were not.
For most businesses, this is a situation that they did not or could not have planned for. Some businesses, however, may have planned for it without even knowing it. Many commercial insurance policies contain coverage for losses caused by a business interruption due to, among other things, disaster-related damage. The goal of this coverage is to put the company back in the same or similar position it would have been in had the interruption not occurred – in this case, the financial position a company would likely be in if the COVID-19 pandemic had not happened. This coverage can include reimbursement for loss of profit or rent, payment of expenses related to the COVID-19 pandemic (such as costs for extra sanitation measures) and other similar financial damages.
As you would expect, insurance companies are denying almost all of these claims. Many insurers have gone so far as to issue public statements claiming that none of their policies cover claims relating to COVID-19 because business interruption claims can only be made where there is direct physical loss or damage to a property. The insurance industry is also lobbying the federal government to prevent insurance companies from having to pay claims related to COVID-19. Lawsuits have begun around the country already with some high profile businesses filing suit against their insurers and seeking a ruling that the company’s insurance policy covers these damages.
If a company can prove a COVID-19 business interruption, many policies have exclusions – some specifically for losses related to viruses. Under Massachusetts law, however, courts examine exclusions very closely – if there is any question as to whether coverage applies, the question is typically decided in favor of providing coverage. Whether a valid claim exists or not will come down to the wording of the policy and the law that will apply to the interpretation of the policy.
SUGARMAN’s litigation attorneys have a long history of representing clients in claims against insurance companies. If you believe that you may have a claim for a disruption to your business that is covered by an insurance policy, we would be happy to speak to you. Please contact us at 617-542-1000 or email us at firstname.lastname@example.org to connect with a principal today.