Business Income Insurance Claims

Providing Business Liability Insurance in Austin, Round Rock and All of Central Texas

Business Income Insurance Claims

I have been reading several of the posts on social media about the applicability of business income to Coronavirus claims.  It is pretty easy to predict how a particular poster is going to fall on the issue with lawyers suggesting there is coverage and insurance agents and carriers suggesting there isn't.  Everything I have seen and heard is that carriers have, and will continue to, deny claims of this sort.  What we are really discussing then is how these claims will play out in courts as lawsuits follow.  As a lawyer and insurance agent I appreciate both perspectives.  The stakes are certainly high, as insurance carriers are talking about the size of claims exceeding the insurance industry’s ability to pay, and restaurants and bars facing permanent closure.

Obviously, it comes down to the policy in question, and the interpretation of the policy language in each case.  The article attached is a good mix of policy language and legal interpretation, including the specific ISO policy sections at issue in the current French Laundry restaurant suit and the virus/bacteria exclusion found in a number of policies.

https://insurancecommentary.com/business-income-insurancedoes-it-cover-coronavirus-shutdowns/ 

What I find interesting, and look forward to seeing play out, is how the courts treat these cases.  Contract interpretation comes in many different forms.  A court may apply a more classical approach, interpreting only the words of the contract and ignoring the intent of the parties.  Alternatively, they may try to dig in and figure out what each party intended.  They could take a more objective view (enter the reasonable and prudent man), or take a more progressive approach and figure out what is best for all of us at this point.

Learn more on how Sunstone Insurance Agency can help you with Business Income and Extra Expense Insurance.

An added layer of complexity is the fact that this is an insurance contract.  Insurance contracts are often negotiated on terms (the insured pays more premium to remove an endorsement or exclusion), but the language is rarely changed by the insured.  Most often, the insured gets the language provided by the carrier.  For this reason, I could see many courts siding with the insured.  Apply that dynamic to the current situation.  Does it really matter what the owner of French Laundry thought his policy covered when he bought it?  My guess is he and/or his attorney never read it.  Moreover, they never could have contemplated the disruption of the economy on this scale.  The insurance industry clearly contemplated it, and tried to exclude it.  If you look at the article attached, the filing for the exclusion cited in the article shows they contemplated a claim on some level for this kind of thing.  I would be fearful if I was a carrier and I did not include the virus/bacteria exclusion in a policy.

So is there coverage?  Clearly, the answer from the carrier is a resounding “NO” but that isn’t where the issue will be decided.  Like I said, I have a toe in both waters, and I am pulled in both directions.  I think two things are clear: 1) the insurance carriers did not rate their policies with this kind of exposure in mind, and 2) the insureds never anticipated this issue and expected insurance to cover it.  Think what you want about insurance carriers, but I find them to be well-intentioned business trying to make money, just like French Laundry.  As offended as French Laundry would be to have a court come in and apply a level of financial burden that was never bargained for, the same logic applies to Hartford.  Then again, Hartford wrote the contract, and Hartford knew better than anybody what its capacity for loss was.

This is obviously going to take months or years to play out, and a large part of it is going to be how the contract is interpreted.  Courts, juries and appellate courts are made up of people.  People have feelings.  And there is no middle ground here.  As soon as a carrier begins to cover it for one, the floodgates open.  At the same time, businesses are shuttering and there is no end in sight.  For that reason, it is impossible to apply a purely legal analysis to this situation.

Learn more on how Sunstone Insurance Agency can help you with Business Income and Extra Expense Insurance.

Marissa Brinkman
Marissa Brinkman
21:48 18 Feb 20
Rhett and Debbie are efficient, friendly, and informative! They have excellent customer service and a very quick turnaround.
Cindy Brummer
Cindy Brummer
23:36 17 Feb 20
Rhett, Debbie, and the team at Sunstone are my go-to. They make sure I have the right amount of coverage for my company and that I'm not overpaying. When I need documents or have questions, they are quick to respond and help me. For example, when I needed to increase cyber coverage last year, they did the research quickly, let me know my options, made a recommendation, and we were able to increase coverage. Even better bonus -- the increase wasn't as much as I had expected. Woo-hoo!
William Hines
William Hines
18:27 21 Sep 15
I highly recommend Rhett Braniff for you insurance and risk management needs.I have known Rhett for a long time, so I trusted him with my insurance. Insurance for my business is important to me, and I wanted to make sure I was properly covered. When my policies were coming up for renewal, I asked Rhett to review them. After looking them over, Rhett was able to identify some key areas of my coverage that needed attention. He presented me with several options that allowed me to get great coverage that fit our budget. I secure with my insurance, and I didn’t have to spend a lot to do it.Most of all, Rhett made it easy. He broke down the various coverage areas in easy to understand language, and was able to answer all of my questions. Rhett was sensitive to my time constraints, and didn’t unnecessarily burden me with the process.I recommend Rhett for all your personal or commercial insurance needs.

Ready To Get Started

Simply fill out the form below and we'll send you a quote for free to make sure you and your business are fully covered.

Fill Out This Form To Get Your Free Insurance Quote

Get A Free Quote on Your Insurance

We'll find you the best coverage at the lowest price. 

Your information is kept secure and private.

What is the insurance for?

Name

Email

Share
Tweet
Share
Email