Florida Gov. Ron DeSantis issued a stay-at-home order to counter the spread of COVID-19 in our communities. With closures last year throughout the state for many businesses, owners and operators are facing more than employee layoffs — they are fighting for their livelihoods.

The loss of business and the sheer uncertainty of both the novel coronavirus (COVID-19) and the 30-day timeline have raised more questions than answers. Unfortunately, not all businesses will be able to survive. However, those businesses with “business interruption” coverage in their insurance policies may offer them an avenue to recoup some of their lost revenues during this down time.

Understanding business interruption and how the policy clause relates to COVID-19 is difficult. Commercial property insurance that includes business interruption coverage is designed to compensate owners for lost revenues from forced or unforeseen closure. Although some of these policies include clauses to cover losses when a government agency stops a business from operating, this insurance typically covers weather-related incidents that can be held directly responsible for physical loss to property, such as hurricanes, earthquakes, wildfires and windstorms.

But as fear and the reality of losing income mounts from shutdowns and recommendations for social-distancing continues, business owners with interruption clauses in their commercial property insurance policies want to know if a virus can cause physical damage.

Businesses are filing lawsuits against insurance companies

Although a virus would not normally be seen as having the ability to cause physical property damage, COVID-19 may compromise the premises to create a dangerous risk, such as contaminated surfaces or the overall air quality. That’s the argument attorneys for a New Orleans’ restaurant are presenting in a civil district court in what was believed to be the first U.S. business to file suit against an insurance company to cover losses due to a government-ordered coronavirus closure. Other cases are now following suit around the country under the same theory to challenge the exclusions and allow coverage under these policies, as the virus is now having such a devastating effect on business.

More lawsuits are likely to follow around the country and the debate over business interruption coverage is not likely to be quelled anytime soon. Meanwhile, legislators in at least four states are considering enacting laws that would allow retroactive changes to insurance policies that would require insurers to make payouts for business interruptions resulting from coronavirus. The constitutionality of these measures has yet to be tested by the courts.

To arrange a consultation, please contact us by email or call 239-922-3888. We represent clients with insurance disputes throughout the State of Florida.

Failure to file a claim could be financially crippling

In these uncertain times, one thing is clear: businesses are facing huge losses from a pandemic that has financially ravaged companies locally and across the nation. Just a few weeks ago, these were healthy businesses. Now, through no fault of their own, they have to lay off employees and figure out how to pay their bills. Our attorneys understand their plight and are busy examining verbiage that might trigger coverage and exploring creative ways to make a case for small and medium-sized businesses in this time of crisis.

Insurance is supposed to be a safety net, yet failure to immediately recognize and file a claim can be financially crippling. That’s why it is important for all business owners to review their policies, determine if they have business interruption coverage, and document the impacts.

Although the policy should outline specific coverage, the fine print may state exclusions that will determine whether or not a claim will be denied or underpaid. Because of the complexity in these areas, it may be necessary to have a policy and its endorsements reviewed and evaluated by counsel experienced in insurance litigation.