A second court in Ohio has ruled for policyholders and refused to throw out an insurance claim for financial losses following government orders shuttering businesses as a result of the pandemic. The policyholder argued that it was entitled to lost “business income” under its commercial property coverage, including lost net income, employee wages, and continuing expenses. In its ruling, the court rejected the insurance company’s virus exclusion, reasoning that the insurer should have instead had a pandemic exclusion. This ruling gives renewed hope for restaurants, theaters, realtors, developers, landlords, and other small businesses.
Given this recent trend in favor of coverage, it is critical that you notify your commercial property insurer of your claim for lost business income promptly. Many policies require that you give notice of the direct physical loss as soon as possible, including a description of how, when, and where the direct physical loss occurred. As we come up to the one-year anniversary of when the shutdown orders were first issued (March 15), it’s critical that you send your insurer written notice that you are presenting a claim for coverage. In addition, it is critical to determine whether your policy has a suit limitation period. Some policies require suits relating to coverage denials be filed within a certain period of time—sometimes even within one year of the loss—so policyholders must be vigilant in assessing whether they need to file a claim, file a lawsuit, or enter into a tolling agreement with the insurer extending the suit limitation period to preserve their rights.
In addition, the notice should say your business is presenting a claim for business income under your insurance policy’s business income, civil authority, and any other applicable coverages. You can present a rough estimate of your damages including your lost net income and your continuing expenses for employee payroll, rent, utilities, insurance, and other continuing expenses.
Finally, if your insurance agent or broker discourages you from presenting a claim, do it anyway! You don’t want the clock to expire on your claim because you may never have another opportunity to recover your losses.
Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.