Business interruption insurance in the coronavirus era - some say it can be a lifesaver for companies; others say it will be worthless in the end. As with most things in life and insurance, the truth lies somewhere in between and will depend on a number of factors. Waller's Mark Bell joins us to separate fact from fiction.
Business interruption insurance in the coronavirus era - some say it can be a lifesaver for companies; others say it will be worthless in the end. As with most things in life and insurance, the truth lies somewhere in between and will depend on a number of factors. Waller's Mark Bell joins us to separate fact from fiction.
Lance: 0:04
welcome to point by point conversations, interviews and legal commentary for today's business professionals. Brought to you by Waller Business Interruption Insurance In the Corona virus era, some say it could be a lifesaver for companies others say will be worthless. In the end, As with most things in life and insurance, the truth lies somewhere in between and will depend on a number of factors. Waller's Mark Bell joins us to separate fact from fiction. All right, welcome to point by point with me. Today's Mark Bell, a partner who's practice, focuses on insurance coverage and litigation matters. Thanks for joining a smart to kick things off. Can you set the landscape for us? What are you hearing from clients as it relates to Cove in 19 and the impact on business?
Mark: 0:54
Yeah, thanks very much for having me today. Um, we've been following a topic very closely. I think the biggest question, but I've been hearing is Do I have insurance coverage for this? Um, and to do that, we kind of need to set the stage a little bit as we think through whether there is or isn't coverage, it is always going to depend on the language of the policy and the jurisdiction that's in question. Those two pieces are gonna have a tremendous impact on whether or not there will be covered. There's not a uniform answer of yesterday's coverage or no, there is cup. There's not coverage. It's all going to depend on the specific policy language, that issue and the jurisdiction where that's gonna take place.
Lance: 1:34
Can you give us a couple of examples of dates? Maybe that that look at it differently? Are there differences that you can spell out in terms of how states interpret these policies?
Mark: 1:45
Yes, sir, they're different. States will have different rules of contractual interpretation and insurance policies. Interpretation. For example, some states will follow what's called the reasonable, reasonable expectations doctrine, where they will basically take the position that whatever is the reasonable expectation of the policy holder, if it's supported by the policy language there will be covered for that. Other other jurisdictions are not as policy holder friendly, where they they don't give any credence whatsoever to the policyholders expectations.
Lance: 2:17
Markham curious. So let's say that I have a policy in place and are their key phrases or key things that I should be looking for as a business owner to make an argument that that I would be covered or what? What are some of the things I need to be looking for in my policy and in the specific Burbage that can help me understand if if I'm covered
Mark: 2:39
and there's not in uniform policy, so I'll give some sort of overviews and there's two pieces of the policy that are gonna come into play that first is the coverage grant or basically, what is going to be covered by the policy. There's not a uniformed insurance policy, but the insurance servicesoffice provides a policy forms and endorsements, and many insurance carriers will take those forms or endorsements, and either not for them for bait, um, or they'll have minor tweets and modifications. Thio. But a lot of the policies they're gonna be based on that similar language in the insurance servicesoffice, there are really three coverage grants. There's what's called a narrow form or limited form. There is a broad form, and then there's a reform. The basic form, which is the limited form, will cover a certain specific perils. And if apparel is not listed on there, you'll have no coverage for us. So in those if you've got a basic policy, it's called a basic foreign policy in the ice, a language it'll be tricky to find comes because you won't see viruses or contaminants or pandemics have listed there. There's a broad form which sort of follows the same tractor trajectory. That is, if something is specifically listed is covered. You have coverage for, I think, in the broad forms does not have a pandemic virus or anything else type of coverage grant. So those two policies are going to be very difficult to get coverage under. The third form is what's called the special form policy, which basically is a It's also pristinely called the all risk policy. And what that means is that basically all risks of lost are gonna be covered unless they are excluded. So that's the policy that that is the most likely to be able to provide coverage is the special or all risk type policy. Now again, not all all these policies are going to cover the krone virus recovered 19 but at least in that area you'll have a much better chance of covers than you would have in the basic or garage form policy language.
Lance: 4:51
Sure, it sounds like it really depends on the policy, and the policies may be different. That jurisdiction and interpretation may be different, so it sounds like there's a lot of unanswered questions that I'm sure we're gonna be sorting out in the weeks and months to come. Um, are there certain actions, though, that that our listeners should and could be taking now, either in terms of documentation or just trying to get a handle on what would be a part of a claim? Can you walk us through what they could be doing right now, even though they don't know for certain that will be covered? That, at least in terms of, to be able to start to make that argument or start to be able to get a handle on what could be involved in a claim?
Mark: 5:31
Absolutely the first and most important piece is actually getting. They're handle on the physical policies or electronic version of the actual current policy. A lot of times will have clients that'll send us a policy to review, and the coverage period will be 2018 or 2019 on don't cover the current period. So that that's gonna be the first step is to actually get the current Paul's. This in place. The policies can change over time. Occasionally, brokers maybe may place it with the different insurance carrier all together, where the old policy will have no application whatsoever. What's going on today? The first part is to get a full copy of the full policy. A lot of times clients will have maybe a certificate of insurance or they'll have a few pages of the policy. But really, to be able to analyze and determine whether there's coverage, you need to get the current full version of the policy of what's actually in place today. That that that's the first step, obviously, is to get that policy than the second step, take it to review it and to be ableto review the actual language. You may want to look to somebody that has experienced in interpreting these things. Ah, lot of times just simply asking the broker O. R. Agent, whether something is covered or not, you may not get a fulsome answer as to whether that specific policy doesn't cover. A lot of brokers and agents are saying that either there is coverage for Kobe or there's no coverage for Kobe Maurin. Sure, more agents than not a thing that there is not coverage for Kobe. But But it's one of these things where there's not again a uniform answer that all these things are covered or they're all excluded.
Lance: 7:10
All right, thank you. Well, it's this question. So is there a particular point that if I'm a business owner, I would want to get legal counsel involved either in reviewing the policy and helping toe make that case or what? What point would you advise clients to seek out counsel on helping sort this
Mark: 7:28
out? I think it doesn't hurt. It's worth it to get somebody involved right away. I know. For a lot of clients, we are doing just no no cost or charge reviews for some clients, if nothing else is requested, are warranted just to give a little overview advice as relates to the policy in question. I know a lot of other lawyers are doing the same thing of animals. They hate this. These are the issues that you're gonna have. Here are the sharp spots of your particular policy on your particular jurisdiction that visit. Owners have a better sense of whether they have any chance of recovering under under their policy, or they have a very, very, very, very small, incontestable chance of getting any coverage. So I think getting somebody involved early, it makes a lot of sense just so that way you can play in this business owner of whether you have a shot of recovery or whether there's really not not much of a chance. I will add the caveat to that. There are a number of jurisdictions, I think. Currently there are four jurisdictions. Where in the state Legislature there is other are either bills that have been introduced or that are working their way through where state legislatures have are attempting thio putting legislation that would require insurance companies to cover Corona virus related business interruption losses. It's very, very early in that stage. No jurisdictions have actually passed any of those yet, and also there will certainly be challenges to those down the down the road of whether they're enforceable, whether they violate state or federal constitutions or expose facto types laws, so that that's gonna be something sort itself out over the longer term. But that is something that may play in your particular jurisdiction down the road of being ableto understand whether the Legislature is gonna actually legislate for coverage in certain circumstances?
Lance: 9:23
No, it's also my understanding that within the House of Representatives, there's been at least some discussion about kind of that on a broader level. Do you have any insight into kind of anything that might be happening at the federal level?
Mark: 9:35
Yeah, Few weeks ago, there was a bipartisan group of 18 members that requested the insurers cover business interruption losses. That was not that was not well received that that has not gone forward at this point, that insurance. I've seen a number of different things in publications that insurers are estimating. The losses that would result from covering all of these claims for all related businesses will be absolutely crippling to the insurance industry and that they wouldn't be able to do it. I think that will be a challenge at the federal level. I think the state level that's gonna be a challenge to, but it is definitely worth watching worth keeping an eye on.
Lance: 10:15
Is there any advantage to going in and starting this process? Earlier, our business owners. Okay, if they kind of wait a few weeks and sell things kind of roll out a little bit, they get a chance to see the full impact. Is there anything in regards to timing that business? Owners should be thinking about
Mark: 10:32
you with with any insurance coverage, the time he is always important and providing notice two carriers as soon as possible is definitely preferred. You could be harmed by providing noticed. Too late. There's in some jurisdictions. If you don't provide timely notice, you can actually lose coverage altogether. So it's very important to get the notice in as soon as reasonably practicable. Even if you don't know just full extendable losses. It doesn't hurt to provide notice, and we will get that process started. If you don't provide notice and you decide to wait six months, nine months a year to figure out whether what the total amount of losses, all whatever things gonna hour he's gonna shake out. You may be faced with a a harder battle on coverage because you didn't provide timely notice to the insurance carrier.
Lance: 11:21
The last question Obviously there's a lot of uncertainty right now. Is there any way to give a realistic timeline. So let's say that you're insured does provide some level of coverage in some level of payment, any kind of an idea of a timeline of when business owners might be able to see some of this? Or is it going to be a A pretty long process to actually see funds that they can? They can start using.
Mark: 11:45
It will likely be a bit of a process, and it's again determined that someone could be depending on jurisdiction. Some jurisdictions have requirements for how promptly insurers have to pay claims. Other jurisdictions don't have those same work arms for have different requirements. As far as how promptly insurers have to turn around and pay the claims. I think in most circumstances you would likely have to wait out the waiting period. Oh, so you could know for sure this whole amount of damages that you're seeking and then be able to commit the final and formal claim at that time and the insurer would have a certain amount time to be able to respond to that and be able to give it be able to pay out the funds so it's not gonna be something in the next. I would be shocked if there was something where somebody got paid in the next 30 days or probably even 60 days. I think that's probably that's probably far too optimistic on guy know that there are a few lawsuits now. There's been lawsuits in several different states seeking coverage. So when lawsuits targeting filed, obviously that extends that duration of the claim process significantly, too. So I think it's gonna be a long fight, and I don't I'm hopeful that payment start getting made and issued early on, but I think it may be a while before people start seeing funds is related to the business interruption coverage for Corona virus
Lance: 13:03
Excellent. Great feedback in great advice, Mark, we know it's busy time right now. We thank you so much for coming on the podcast, and we look forward to talking to you again real soon.
Mark: 13:13
Thanks so much for having me.
Lance: 13:15
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