Businesses around the globe have been affected by the COVID-19 pandemic. For some, mandatory closures or limitations on services designed to mitigate the risk of spreading the disease have been particularly difficult from a financial standpoint. Commercial insurance policies often include business interruption coverage that pays the insured a portion of lost income and extra expenses when a covered loss occurs.
Insurance claims related to business interruption coverage have, not surprisingly, risen over the past several months. In most cases, insurers are denying claims on the basis that interruptions due to viral or bacterial infections are specifically excluded in the policy documents. Arguing that financial losses stemmed from governmental closure regulations, that contamination caused direct physical losses, or that the insurer acted in bad faith, many businesses have filed single-plaintiff suits or joined in class-action litigation against insurers, demanding payment.
If your organization is involved in business interruption litigation, include the following steps in your preparation efforts:
- Examine the policy. Review the insurance policy carefully, with an eye toward terms and conditions and “Acts of Authority” clauses. Review the terms to determine whether the policy covers viruses and pandemics, or whether these are identified in the section detailing policy exclusions.
- Understand state-specific insurance laws. Understand how state insurance regulations define insurance companies’ duty of good faith and fair dealing and duty to investigate claims. In general, insurers must investigate and evaluate claims and supporting documents. An insurer that denies claims outright, without any investigatory efforts, may be liable under a bad faith insurance claim.
- Determine the amount of the claimant’s loss. Business interruption coverage must be objective and supported by evidence. Claimed income losses should correlate to business forecasts prepared before the revenue loss occurred. If the insurance policy also includes coverage for extra expenses attributable to the revenue loss, these must be itemized and supported.
- Gather documentation of notices given. Review documentation showing that the policy’s notice and proof of loss provisions were followed as required. Documenting that the insured met their obligations under the policy can support the claimant’s position in business interruption litigation.
At Baer Reed, we provide a range of legal and business services including litigation support to law firms and corporations around the world. To learn more, contact us today.
Mr. Reyes graduated with honors from the Ateneo de Manila University, where he received the Procter and Gamble Student Excellence Award. He obtained his Juris Doctor degree from the Ateneo de Manila School of Law. During law school, Mr. Reyes was part of the Philippine delegation to the Willem C. Vis International Commercial Arbitration Moot held in Vienna, Austria. He was also a member of the Ateneo Society of International Law and the St. Thomas More Debate Society. He completed his internship at the Public Attorney’s Office. He wrote a thesis entitled: “To Kill A White Elephant: An Analysis of the Fiduciary Exception to the Corporate Attorney-Client Privilege”. Mr. Reyes is admitted to practice law in the Philippines and the State of New York.
Ms. Lardizabal-Manzano is a graduate of San Sebastian College-Recoletos, where she earned her B.A. in Political Science. In 2003, she received her law degree from Lyceum of the Philippines and was admitted to practice law in 2004.
Matthew Hersh earned a B.A. in Political Science from Columbia University in 1990 and graduated cum laude from Georgetown University Law Center in 1999. He also holds a master’s degree in international relations from the Georgetown University School of Foreign Service.
Cap. Avi Levak (Res. IDF) graduated from from Israel’s prestigious Ben-Gurion University of the Negev with a Bachelor of Science in Computer Science and Mathematics. He is also a Leadership and Communication coach trained in TuT coaching by Alon gal in Israel. Avi specializes in high-level, in-depth analysis of business and client needs, within systems and software strategy and architecture.
Ms. Tyler graduated cum laude from Georgetown University and received her law degree, cum laude, from Georgetown University Law Center. During law school, she interned at the United Nations Economic Commission for Europe. She also worked on The Tax Lawyer journal and was a member of the award-winning Barristers’ Council Mock Trial Team. Ms. Tyler is admitted to practice law in the State of California and the District of Columbia.
Ms. Cruz-Anonuevo graduated cum laude and top nine in her batch from Miriam College with a degree of Bachelor of Arts in InternationalStudies. She obtained her Juris Doctor degree from Ateneo de Manila University School of Law in Rockwell. During law school, she interned in Rivera, Santos, Maranan & Associates. She was also part of Ateneo’s Labor Law Bar Operations. She wrote her thesis on, “Stealing Privacy: Limitations on Media’s Photographic Invasion.,” Ms. Cruz-Anonuevo is admitted to practice law in the Philippines.
Ms. Aquino-Batallones obtained a Bachelor of Arts degree in Development Studies (with Minors in Global Politics and Hispanic Studies) from the Ateneo de Manila University. In 2011, she received her Juris Doctor degree from Ateneo de Manila University School of Law. During law school, she interned at Romulo Mabanta Buenaventura Sayoc & de los Angeles then became an intern of Ateneo Legal Services Center’s Clinical Legal Education Program.
Mr. De Guzman graduated from San Beda College with a degree of Bachelor of Arts Major in Economics and received his law degree from San Beda College of Law. He is multilingual and is fluent in three languages: Chinese, Filipino, and English. He was admitted to the Philippine Bar in 2003.