Louisiana is the newest state to be introduced Legislation that would require corona virus companies to cover their income. No state parliament has finally voted on these bills. One has to ask whether these are made for political pressure or could simply be political opportunism.
An article in Law360, Do not assume that virus coverage is covered by voice bars with physical lossseemed to give some optimism to the premise of reporting. Here is part of the article on the civil authority:
Civil authority and physical loss
If the greatest business damage is currently occurring with on-site orders across the country, the immediate question is whether these orders will lead to income claims for companies that fall under the civil law coverage provided for in many commercial policies.
Interruption claims after evacuations provide insight into how the courts view such claims. The results vary across the country.
Georgia believed that the loss of business income related to an evacuation in anticipation of a hurricane was a covered loss, as a civil service agency found that buildings need to be closed to protect themselves from expected damage, as others did from the hurricane first affected areas.1
The Texas courts, meanwhile, came to the opposite conclusion and found that the risk of harm did not meet the political requirements of a direct physical loss of other premises.
A South Dakota court ruled that where a city was evacuated due to an approaching wildfire, the civil authority’s order to evacuate the city would have been covered in anticipation of a physical loss (had there not been a 72-hour waiting period in the police ), but not the days after the order was placed, when many roads were still blocked because there was no order that prevented customers from getting to the store.2nd
After the September 11 terrorist attacks, some companies claimed business interruption because civil authorities had shut down airlines, affecting their business at airports or in the travel or hospitality industries. Courts across the country were unanimous that the connection there was too weak since the twin towers had been destroyed, but the civil orders that established flights did not prohibit people from visiting the premises of the damaged companies.
Stacy Tucker also made these comments, which suggest that the proposed legislation will not be helpful to policyholders in future litigation:
In the meantime, legislators in New Jersey, Ohio, and Massachusetts have included bills in their legislation in the past two weeks to retroactively require that business interruption policies include COVID-19 as a covered loss. While these efforts demonstrate the widespread belief that insurance should cover COVID 19 claims, the bills may be unnecessary.
They can even prove harmful to insured people seeking cover, as legislators’ efforts suggest that there may currently be no cover, a legal conclusion that no court has yet reached.
Will courts only detect virus contamination if there is evidence that a sick worker was in the building? Will the illnesses and deaths of thousands of Americans be enough to represent a physical loss in other premises and thereby trigger civilian coverage? These questions will be at the forefront of litigation on this subject, and the answers are not yet clear.
The only answer that’s clear? It is a mistake to assume that COVID-19 business interruption requests are rejected by the courts simply because they are not based on structural physical damage.
Thought for the day
There is nothing to fear in life, it can only be understood. Now is the time to understand more so we are less afraid
1Assurance Co. vs. BBB Service Co.593 S.E. 2d 7, 265 Ga. App. 35 (Ga. App. 2003) .
2ndBy Development, Inc. v United Fire & Cas. Co.04-5116, 2006 WL 694991 (D. S. D., March 14, 2006).
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