We hope our readers and friends are all staying safe, practicing social distancing, and doing everything you can to protect yourselves from COVID-19. We’ve written about COVID-19 and business interruption claims in the past and there was more news in today’s Wall Street Journal on the topic. Because business interruption insurance policies are typically “named peril” insurance where physical damage to business property is the trigger for coverage, claims for business interruption due to COVID-19 closures may be met by arguments of insurance carriers that there has not been “physical damage” to insured business property, and that there is therefore no cover for the losses.

Some insurance carriers wrote exclusions into their policies which specifically exclude insurance coverage for losses arising out of a pandemic like COVID-19. In 2006, the Insurance Services Office created a form exclusion related to these losses. The form wording specifically excludes losses or damages caused by or resulting from “any virus”. ISO (Form CP 01 40 07 06) “Exclusion for Loss Due To Virus Or Bacteria”. This is not to say that all potential COVID 19 pandemic related business interruption claimants will be blocked from making any recovery. Indeed, it is very important to read the policy. Some businesses may be insured under coverage forms which do not claim contain any virus exclusion clause. Extensive litigation in the United States over the meanings of wordings is already underway.

Two pieces of COVID 19 Insurance claim news hit papers today. The first is that, according to the Wall Street Journal, US House Lawmakers, insurance Broker Marsh, and others are working on legislation to potentially create a government backstop arrangement which would provide coverage for pandemic related business interruption claims in the future. The legislation would not apply to claims from COVID 19, but seek to ensure that in the event of a future pandemic, businesses won’t have coverage disputes with their insurance companies like they have currently. The program would likely be modeled on the Terrorism Risk Insurance Act 2001 – 2002 where insurance carrier exposure will be capped under the program, followed by a “backstop” by the US government. So far, the two main insurance industry trade groups oppose such plans, while organizations representing buyers of insurance and, apparently Broker Marsh, are in favor of such a program.

Also, in today’s Wall Street Journal, we saw indications from Lloyd’s of London that the insurance market is set to payout between $3 billion to $4.3 billion in claims as a result of the coronavirus pandemic. Lloyd’s estimates that if lockdowns persist, this figure could be $1 billion to $2 billion higher. In particular, event cancellation claims are piling up. We saw recently that the Wimbledon tennis tournament is apparently making a claim under their event cancellation insurance in the amount of $142 million after paying premiums in the amount $31.7 million over the past 17 years.

The sum of all these insurance claims is massive. As examples for comparison, Lloyd’s paid out $4.7 billion in claims related to 9/11 and $4.8 billion for claims related to hurricanes in 2017. Some business owners may wonder how it is that insurance companies are set to pay out billions of dollars of claims arising out of event cancellation and property covers when, at least here in the US, insurance carriers contend that most commercial property policies/business interruption do not provide cover for the pandemic related losses. Simply put, after the SARS outbreaks in the early 2000’s, insurance carriers recognized that the occurrence of a 100 year event like a pandemic could result in massive losses for which the coverage situation might be ambiguous. This was the reason the exclusions were placed in into many policies back then.

Similarly, some businesses (or their savvy insurance brokers) (i.e. the Wimbledon tennis tournament) recognized the risks, just as the carriers did, and decided that they needed to have cover for losses arising out of a pandemic, such as the coronavirus. For other exposed businesses who have no cover such as restaurants, bars, bowling alleys, sporting leagues, event, halls, etc.), we wonder whether they (or their agents) gave any thought to this aspect of risk management and what, if any, discussions or advice were given by brokers at the time these exclusions became more widespread.

When an injury or accident requires that the “fine print” of an insurance policy be reviewed to determine whether there is coverage, the insurance aspects of a claim can become complex. Anyone involved in one of these situations should contact an experienced Fort Pierce personal injury attorney to protect their rights.

Injury attorney Todd C. Passman of Fort Pierce, Florida handles all types of insurance and injury cases serving Port St. Lucie, Fort Pierce, Vero Beach, Stuart, and Okeechobee and surrounding areas.

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If you are a family member or friend how insurance covered loss or have questions about an insurance claim dispute, please contact St. Lucie injury attorney Todd C. Passman today at 772-465-9806.