Coronavirus Business Interruption Insurance Attorney
COVID-19 started as someone else’s problem. Then, almost overnight, coronavirus essentially paralyzed California. Now, residents, and especially business owners, might be struggling with the aftereffects for many more months or even many more years.
Most homeowners’ insurance companies quickly settle claims. With the exception of dog bites, these claims are usually only a few thousand dollars. For the insurance company, paying the claim is cheaper than fighting it. And in most cases, insurance companies only care about cost.
But commercial insurance is much different. Frequently, issues like business interruption and force majeure involve millions of dollars. Additionally, as outlined below, insurance agreements include vague language in these areas. So, to the insurance company, it’s usually cheaper to fight these claims.
When the stakes are high, the Los Angeles coronavirus insurance attorneys at the Law Offices of Eslamobly Hakim are at their best. The insurance company has a posse of lawyers to protect its interests. Southern California business owners need an equally aggressive attorney to level the playing field. Our Los Angeles coronavirus insurance attorneys are not just good litigators. They are also good negotiators. If the matter settles out of court, and it usually does, we make sure that settlement reflects your best interests.
Insurance and Business Interruption
When it comes to insurance agreements, most policyholders like specific language. They like to know what’s covered and what’s not covered. Most insurance companies like vague language which enables their lawyers to find coverage loopholes. Since the insurance company usually drafts the agreement, guess what kind of language it usually contains.
Physical Loss Clauses
Most policies cover physical loss of, or damage to, insured property. Usually, this coverage applies to fire, theft, and other disasters which significantly affected business operations and were totally beyond the insured party’s control.
Coronavirus definitely meets part of this definition. COVID-19 was an uncontrollable event. And, especially for retail, hospitality, and other businesses which almost completely depend on foot traffic, coronavirus significantly and adversely affected operations. And, the insured party had nothing to do with the outbreak.
But an infectious disease is not a fire or a flood. Insurance companies will almost certainly cite this grey area and deny coverage, at least in part. California law was already quite unsettled on this point. And, COVID-19 has made this uncertainty even worse.
The good news is that loopholes and grey areas work both ways. If the insurance company can deny coverage, a Los Angeles coronavirus insurance lawyer has a leg to stand on as well. So, you need the best possible representation.
Civil Authority Language
Other commercial insurance policies cover losses related to a civil authority’s prohibition or impairment of access. Normally, this language applies to things like quarantines, martial law, and lockdowns.
Does Executive Order N-33-20, the California stay-at-home order, qualify as covered civil authority action? Maybe. Governor Newsome ordered “all individuals living in the State of California to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors.”
However, the list of exempted businesses is rather long. Additionally, there are no criminal penalties for people who violate the stay-at-home order, at least in most jurisdictions. Once again, insurance companies might argue that N-33-20 is not strict or comprehensive enough to trigger the civil authority clause. If that happens, you need someone to stand up for your business. Otherwise, coronavirus-related losses might come out of your own pocket.
Government Action Clauses
These clauses are quite complex and are not used very often. Generally, the insured party need not cite physical damage or civil authority. Adverse government action alone is enough to trigger coverage.
Most insurance and other contracts have force majeure (superior force) clauses. Neither party is liable for delayed or lack of performance if the extenuating circumstances:
- Were beyond the control of either party,
- Materially affected a central part of the contract, and
- Were completely unforeseeable, and
Repeating a familiar theme, force majeure clauses might or might not apply to COVID-19 interruptions. For the most part, neither party had any control over the coronavirus. But the other two elements, lack of foreseeability and a material effect, are more difficult to establish. Generally, the party seeking to break or enforce the contract has the burden of proof on this issue.
California will eventually recover from the coronavirus, but the road will not be easy. For a free consultation with an experienced Los Angeles coronavirus insurance attorney, contact the Law Offices of Eslamboly Hakim. Home and remote conferences are available.