As professional practices deemed to be non-essential face losses in cities across the country, business owners and their insurance brokers are reviewing business interruption insurance policies. Will the insurance companies deem their claims to be the result of an exclusion, or will these insureds receive any coverage, after years of paying premiums?
The “New York State on PAUSE” executive order issued on March 20, 2020, may signal the possibility of coverage for business interruption insurance policies under the “civil authority” provisions. However – as we know from battling insurance companies – there are never any guarantees. And deadlines for filing, along with extensive documentation, will be strict.
Several years ago, Frankel & Newfield faced a situation with an insured who was denied on the basis of an exclusion in his coverage. In Frankel & Newfield’s published decision, Dream Spa v. Firemans Fund Insurance Company, in the US District Court for the Southern District of New York, the firm aggressively represented a business owner whose insurance company denied the business interruption insurance claim. The company refused to pay on the claim, based on an Act of God provision. Flooding had led to a sewage pipe breaking, which it said was not covered.
Frankel & Newfield fought back, and won, getting the claim paid for our client. The Court found that the language of the policy supported the coverage for the insured, and that if there had been any policy ambiguity, it would be read in favor of the insured. These same principles may be applied to our current dynamic.
Many of our clients are professional practices and small business owners – dentists, chiropractors, restaurant owners and other small businesses who are not deemed to be essential. We are hearing from them. Will they get the coverage they have paid for? What are the insurance companies doing about these claims?
If you are concerned about filing a claim for business interruption insurance, call our office at 877-583-2524.