With a record number of Americans filing for unemployment (about 3.3m) amid the COVID-19 crisis, the economic fallout is beginning to be felt by employers and employees alike. Now more than ever, business owners should be analyzing their financial health and determining what course of action to take going forward, particularly in the short term. Part of this analysis should include an immediate review of available policies of insurance.
We previously wrote on the topic of business interruption insurance and the potential coverages available amid the COVID-19 crisis . Companies are already starting to test their insurers on the available business coverages for this virus and its clear economic impact.
Specifically, the popular Oceana Grill in New Orleans, filed one of the first actions against its insurer, Certain Underwriters at Lloyd’s, London, seeking a declaration that “because the policy provided by Lloyd’s does not contain an exclusion for a viral pandemic, the policy provides coverage to plaintiffs for any future civil authority shutdowns of restaurants in the New Orleans area due to physical loss from coronavirus contamination and the policy provides business income coverage in the event that coronavirus has contaminated the insured premises.”
In the petition, Oceana Grill makes the argument that the policy is an all-risk policy. An all-risk policy is generally meant to cover all direct physical loss unless the loss is specifically excluded or limited in the policy. Oceana Grill asserts that the policy does not provide any exclusion due to losses, business or property, from a virus or global pandemic. Rather, the policy has “excluded losses due to biological materials such as pathogens in connection with terrorism or malicious use, therefore, providing coverage to other viruses or global pandemics. Oceana Grill notes that “[t]he virus is physically impacting public and private property, and physical spaces in cities around the worlds…[and] [t]he global pandemic is exacerbated by the fact that the deadly virus physically infects and stays on the surface of objects or materials, ‘fomites,’ for up to twenty-eight days, particularly in humid areas below eighty-four degrees.” It follows, Oceana Grill argues, that any contamination of the insured premises would result in direct physical loss needing remediation to clean the surface of the establishment.
Because this petition is newly filed, we must wait to analyze the insurer’s response to Oceana Grill’s arguments and the court’s response to the flood of briefing that will likely ensue in the case.
Famed and award-winning restaurateur, Thomas Keller, has also very recently filed suit on behalf of restaurants, including The French Laundry and Bouchon, against his insurer, Hartford Fire Insurance Company and Trumball Insurance Company, also seeking a very similar declaration of the court and making very similar arguments as those made by Oceana Grill. The suit was filed in California state court.
These two recently filed insurance actions should be taken as a signal that the claim floodgates are opening and it is time to put your business in the best possible position to preserve and make an insurance claim in the event you have the proper coverage.
What Should My Company Do?
It is vitally important to know what your policy covers and what it does not cover. The arguments being made in the cases described above depend heavily on two critical things: (1) the specific language of your policy; and (2) the specific nature of the facts surrounding your loss.
Time is always of the essence with any insurance claim. It is particularly of the essence with COVID-19-related claims. Gathering the necessary facts and properly documenting a claim should begin now.
As always, the attorneys at LeMaster & Ahmed are here to help you conduct a review of your business policies of insurance. We are also here to help guide you through the claim process. Contact us at our Houston location at 832-356-7983 or our DFW location at 972-483-0410. You can also message us any inquiries directly on our website.
***The foregoing is not meant to serve as legal advice relating to your insurance coverage issue. Please contact one of our lawyers if you have questions specific to your particular insurance issue.