We are here to consult with you and provide advice as to whether the losses your businesses are suffering may potentially be recovered from the insurance policies you have purchased to protect against those losses.
First, our goal in investigating a client’s claim is to explore how the components of business interruption coverage may apply to each of these phases, some of which will likely overlap. Some coverages are obvious, such as the closure because of civil government orders and the contingent business interruption period, but others are not. Thus there may be gaps in the business income coverage that must be analyzed with the goal of covering all of these phases, if possible.
Second, we have concerns about the coverage for payroll under either (or both) the basic business interruption coverage and the extra expense coverage. Given the significant loss of jobs, the availability for coverage for payroll for any of the above phases will directly correlate with the evolving unemployment picture. For insurers to refuse coverage for payroll will put the insurance industry in a very negative light given the significant unemployment. The need to explore the availability of coverage for payroll may determine how quickly claims for payroll can be made. This may turn out to be one of the most important business income loss coverages and the one most difficult to defend against by the insurer.
Third, given the need for businesses to get cash in hand quickly in order for the businesses to survive and avoid bankruptcy, or to avoid losing valuable and essential employees that will be needed when the businesses can reopen, retain distribution lines of supply and distribution, etc., what form of legal proceeding with corresponding remedies should be considered, for example, filing for declaratory relief, rather than filing an action which also seeks damages. There are pros and cons to both avenues, but the client’s situation may dictate the proper course of action
Fourth, what are the most persuasive processes for presenting the insured’s claims? What types of documents or information should the insured be providing as quickly as possible? We will discuss this with our clients once we become acquainted with the internal aspects of the businesses they operate and establish a protocol for collection and retention of supporting documents.
Fifth, proof of the presence of the virus will be required in order to succeed. A discussion about the burden of proof, both scientifically and practically, will demonstrate what must be shown under the typical language of these policies in order to prevail for this element of the claim.
The above information and questions are provided to frame some of the issues our clients will confront in litigating these claims and to afford you an opportunity to begin considering what efforts and resources may be required to investigate and prepare the submission of a claim and the filing of a lawsuit if necessary.