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Will Insurance Policies Compensate Business Owners for Losses due to the Coronavirus - The Eberst Law Firm

COVID-19’s Impact on Florida Businesses

Between speaking with friends and family and watching the news, most of us know or have heard of people whose businesses have been negatively impacted by the coronavirus, but what may be less apparent are the steps that these business owners will take next in order to stay afloat and ultimately save their businesses as the devastating coronavirus virus sweeps our nation.  From Florida’s northern cities of Daytona Beach with the International Speedway, to its popular mid-state attractions like Disney World and Universal Studios, all the way down to the bustling South Beach Miami and the gorgeous crystal waters of the Keys, Florida is one of the most sought out travel destinations in the world, and a large group of its inhabitants make their living by offering travel-dependent services such as restaurants, hotels,  entertainment venues, and the like.  However, authoritative orders to “stay at home” have caused business operations to come to a halt for many of these entities, leaving some of these business owners perplexed as they review their insurance policies for information regarding what, if any, recourse they have for compensation for this unexpected lost business. 

The attorneys at the Eberst Law Firm scour insurance policies on a daily basis, and if you, a loved one, or a friend have suffered a business loss due to the coronavirus and are seeking reimbursement for this loss, we would be honored to take the time to review your policy in full to see if you could qualify for compensation from your insurance company.  Don’t look at it as a handout from your insurance company, rather, look at it as coverage that you pay for with your insurance premiums and are therefore entitled to; after all, a large reason for having commercial business insurance is to protect you against the unknown.

Types of Business Losses/Coverages

Business publication “Florida Trend” recently published an article which explains that business interruptions coverage from commercial insurance policies could potentially come into play for business owners who experience a loss due to the coronavirus.  If this type of coverage were applicable, then an individual’s insurance policy will reimburse its policyholders for the below types of losses:

  • Revenue you would typically be making if your business were open and operating as usual
  • Mortgage, rent, and lease payments for your business space
  • Loan payments you would need to make during the period of loss
  • Tax payments, whether paid every month or every quarter
  • Wages for your employees
  • Relocation costs if physical damages cause you to need to move to a new or short-term business location

Similarly, Risk & Insurance Magazine is a publication that offers a deeper insight into the types of business losses that occur and lead to lost income for businesses and are typically covered by first party property insurance policies:

  • Damage to the policyholder’s own property (business interruption) Example: A hotel has experienced a 70% decrease in revenue over the past month due to a lack of customers traveling for fear of contracting the coronavirus, especially at facilities where many people gather, and therefore the hotel has sustained a direct hit due to the coronavirus.
  • Damage to the property of a customer or supplier or a supplier’s supplier (contingent business operation) Example:  The poultry supplier for a chicken based restaurant isn’t able to sustain operations due to having to lay off 80% of their staff due to a companywide coronavirus outbreak, thus causing the restaurant to have to cease operations as usual for a period of time as the supply of their main product has come to a halt.
  • Government action (Order of civil authority) Example: A golf course loses 50% of their revenue due to Florida Governor Ron DeSantis’ “Stay at Home” order.

Of importance, is that this Risk & Insurance Magazine article explains that a business must sustain “property damage” for there to be coverage for lost profits under a first party property insurance policy.

Applicability of Business Loss Coverage to Coronavirus Claims

The key question regarding this matter is: does the mere existence of the coronavirus (without proving that it even 100% exists at a business site) constitute “property damage” enough so that the affected businesses can receive a payout from its insurance carrier?  There have been comparable cases in the past where the court ruled in favor of the businesses who sustained a loss due to the presence of harmful substances on a property, which caused the first party property coverage to come into play.   

In one instance, an insured church had to quickly sell some of its inventory at a loss, as gasoline had leaked into the basement and the building was on the verge of collapsing; with this case, the mere threat of destruction caused by the buildup of gasoline around the building led to the insurance company ruling that this scenario constituted a direct physical loss.  In another case, the US Court of Appeals ruled that the existence of E.coli bacteria in the well of a house (which leads to respiratory, viral and skin conditions), constitutes as physical loss/damage to a building, the main idea being that the property was made useless/uninhabitable (even though the building was still physically intact).  In the case of “Gregory Packing, Inc. v. Travelers Property Cas. Co. of America”, the court ruled that covered property damage had occurred because ammonia was unintentionally released into a building, which left the building unusable; the court stated that the ammonia discharge constituted a direct physical loss of/damage to the building because the release caused the facility to be unsuitable for occupancy until the ammonia had cleared. These case examples are all explained further on Law360’s article, “Applying Commercial Property Insurance to COVID-19 Losses”. 

  Although we are in mostly uncharted territory with the coronavirus, we at The Eberst Law Firm believe that a powerful argument can be made that property damage has been sustained by businesses due to the presence of the coronavirus.  This past case law for similar cases will be vital in both understanding and supporting these new claims.  At our firm, we will relentlessly research past case law so that we can bolster your claim with your insurance company for business loss due to the coronavirus.  Likewise, we will also analyze your unique case and make suitable, and if necessary new, demands that we feel your insurance company should fulfill, given the unprecedented nature of the coronavirus’ impact on businesses.  We aren’t afraid to fight for you by setting the framework for new case law if need be.

Help: My Policy Excludes Damages due to Viruses

If your insurance company has a specific exclusion for business loss due to viruses and bacteria, DON’T lose hope.  Legislation lately is particularly in flux due to the unexpected coronavirus, and new laws are being considered throughout America almost every day. In the heavily hit Northeast, a new Massachusetts bill is being considered by legislators which would cause insurers, regardless of an “Exclusion for Loss Due to Virus or Bacteria”, to cover losses for many businesses who have been negatively affected due to the coronavirus.   The bill has been formulated due largely to pressure from Massachusetts restaurants who have been ordered to stay closed to dine-in orders until May 4, which could severely and potentially irreparably affect these restaurants.  We believe that this newly proposed legislation could also be seen in other states, especially here in Florida.  At our firm we will be keeping a close eye on newly passed legislation so that we can best serve our clients.

Consult with a Business Loss Attorney Now if Coronavirus has Negatively Affected You

Call us today at The Eberst Law Firm at 772-225-4900 or through our website form, and leave the headache of evaluating your overwhelming insurance policy to us as it is our specialty to review these documents with a well-trained eye.  We know exactly what to look for, and we will use what we find to help you to the best of our ability. We operate on contingency basis, which means that we only take a fee if we recover a settlement for you; if we are unable to recover for you, you won’t owe us anything.  Please call us as soon as possible so that we can begin helping you today.

Sources for “Will Insurance Policies Compensate Business Owners for Losses due to the Coronavirus?”

https://www.floridatrend.com/article/28942/does-my-business-insurance-cover-the-coronavirus

https://riskandinsurance.com/business-interruption-coronavirus/

https://www.forbes.com/sites/alangassman/2020/04/05/florida-governors-stay-at-home-order-clarified-by-qa/#31898ac05eaf

http://www.eberstlaw.com/faq/

https://www.law360.com/articles/1252792/applying-commercial-property-insurance-to-covid-19-losses

https://www.pdxmonthly.com/news-and-city-life/2020/03/an-exclusion-in-most-insurance-policies-means-small-businesses-wont-be-covered-for-coronavirus-loss

https://boston.eater.com/2020/4/1/21201447/insurance-companies-massachusetts-business-interruption-bacterial-viral-outbreaks

Photo by Allie Smith