Summary: The invisible coronavirus' crushing impact is being felt by businesses small and large – and on the insurance companies that insure those businesses. But for those organizations with business interruption policies, do they have a valid insurance claim because the government shut them down and/or their business was "interrupted"? There’s a lot of disagreement and finger-pointing and now Congress and individual states are poised to get involved in what may be a multi-billion dollar solution. Host Lisa Miller, a former deputy insurance commissioner, talks with insurance attorney and consultant John Burkholder and Kevin Miller, a seasoned independent property and casualty insurance adjuster, for answers and advice. Show Notes Insurance claims being filed on Business Interruption (BI) policies generally are focusing on two policy conditions: physical damage and/or civil authority. A typical BI policy requires direct physical damage to a covered property by a covered cause, except as excluded. About 90% of BI policies in the U.S. are reportedly on Insurance Service Office policy forms that specifically exclude viruses. For the remaining policies, it’s also problematic. “In this case (with the coronavirus), we’re not really having something like a direct cause of loss, like a fire. It’s really unique, in that the allegations being made across the country are that it’s because we have a virus in the air,” said John Burkholder, a consultant with Municipal Partners, a firm specializing in risk management for local governments. Other insurance claims are being filed based on the civil authority clause in many policies, where a government authority has ordered a business to be closed. “But in the traditional sense, the civil authority closing someone down has a limiting factor in almost all the policies. Typically, you get up to three weeks and it’s where you cannot enter the property. Here in most cases, you can enter the property,” said Burkholder, who is also an insurance attorney. “The plaintiff’s bar, the claimants, are saying ‘Well we can’t enter because the civil authority says that there’re dangerous conditions in the area and because of the latency of this virus, we can’t get into our property and therefore it triggers business interruption income coverage.” In the meantime, insurance carriers are noting an increase in BI claims filings and investigating individual claims. “That is part of the process of adjusting the claim,” said Kevin Miller, a Sarasota, Florida-based claims adjuster with Velocity Claims Administration, an independent adjusting firm. “It’s about getting recorded statements from the policyholder, gathering documents, collecting information, and sending out reservation of rights letters. Remember, you have to be concerned about avoiding unfair claims practices or bad faith.” Federal lawmakers and an increasing number of states are trying to legislate forced coverage, whether it’s in the policy or not. The Business Interruption Insurance Coverage Act of 2020 in the U.S. House would make coverage available for BI losses “due to viral pandemics, forced closures of businesses, mandatory evacuations, and public safety power shut-offs,” per the draft bill. And it voids any exclusion currently in place in an insurance policy. At least eight states have their own bills – Florida is not one of them. “Business owners are suffering horribly,” said podcast host Lisa Miller, an insurance industry consultant. “They are having difficulty accessing federal bailout funds in some cases, they’ve lost employees, and others are trying to get unemployment. Many of these small businesses are looking for relief fro(continued)
