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Insight Alert: Insurance and COVID-19

April 8, 2020 CGS3 Coronavirus

As the economic impacts of the COVID-19 pandemic continue to unfold, some are looking to insurance policies – especially business interruption insurance – to provide some relief from the financial burden currently weighing on property owners. The current climate is new territory for all parties, so whether relief from insurance will actually come remains to be seen.  It is possible that courts may interpret policy language in new ways in order to provide coverage where historically there was no coverage.  It is also possible that governmental and regulatory agencies may intervene in markets to provide relief and allocate risk as widely as possible – which could include broadening insurance coverage or filling in gaps in coverage.

Despite the unknowns of the present landscape, best practices indicate that it is not too soon to take action.  CGS3’s COVID-19 Legal Task Force recommends that property owners take the following steps now to ensure the most coverage possible, if and when it becomes available:

  • Review your policy. Every policy is different, and coverage may be available. Some polices have express exclusions for epidemics, but many do not.  Similarly, some property damage policies include coverage for losses caused by forced closure of a property by a civil authority.  These may or may not require physical damage to the property in order to trigger coverage, so a careful review of each individual policy is key.
  • Timely tender claims to your insurer. The sooner a claim is tendered the better, as some business interruption policies have waiting periods.  Insurance policies are unlikely to be a cure-all for business losses resulting from the current pandemic, but it is best to err on the side of tendering claims where possible.
  • Don’t overshare. It’s always a good idea to cooperate your insurer’s requests, but let the insurer take the lead in the exchange.  Provide what is needed and requested, and leave out any unnecessary information.
  • Maintain good records. Document the losses and additional costs you incur, as well as all correspondence with your insurer related to the current pandemic. Likewise, keep records of each tender or denial of claim.  When in doubt, document it, and do it contemporaneously with the losses to ensure you are capturing all the information you will need as your claim proceeds.

As always, the CGS3 team is available to assist you in developing a comprehensive and proactive legal strategy that addresses your current business objectives in light of the pandemic-related issues impacting the commercial real estate industry.

CGS3 Insight Alerts are curated with you in mind.  They deliver focused, relevant, and timely information on trending topics to our clients, colleagues, and others in the industry.  Please note that they are intended for general informational purposes only, and should not be construed as legal advice for any specific situation. Always remember to contact an attorney to obtain advice with respect to a particular issue or problem