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Potential Insurance Coverage/Claim Issues from Covid-19 Outbreak

Potential Insurance Coverage/Claims Issues & Options for Losses Stemming Directly or Indirectly from the COVID-19 Outbreak
By Brandon Lewis, CEO, Strategic Claim Consultants
I wanted to take a moment to demystify and bring some clarity to the potential coverage options available to businesses adversely affected by the COVID-19 outbreak. Aside from ensuring the health and safety of all employees, the mitigation of financial losses is obviously the major challenge that all businesses face during this crisis. And understanding and activating the potential applicable coverages that may exist in your policy is critical to that object. Below, I have outlined potential coverage areas that may be applicable as a result of the current crisis.
 
Commercial Property Policy
Commercial property policies can vary a great deal, but the standard, unendorsed policy, would probably not cover losses resulting from a disease outbreak.  However, there are additional coverages contained in a standard, unendorsed policy, which may provide coverage, including:
 
·   Business Interruption Coverage
Besides the tragic loss of life, pandemics can also take a tremendous economic toll. Supply chains are disrupted. Businesses lose both employees and customers to sickness. Quarantines are enforced. Business interruption coveragewhich pays out lost income and extra expenses incurred from a covered loss to the insured property, may provide some financial coverage. An analysis of the policy must be performed in order to determine the applicability of this coverage.
 
·   Dependent Property Coverage: 
Dependent Property Coverage may pay out lost income resulting from a covered loss to a building where you derive revenue.  Most policies do not require there to be physical damage to your building for there to be coverage, but rather require physical damage to the dependent property.  For example, if you provide services to a customer, and that customer's property suffers damage that prohibits you from providing services, you may receive coverage through the dependent property coverage.
 
·   Civil Authority Coverage
Civil authority coverage can afford coverage for business income losses that arise when a civil authority, such as a federal, state, or local authority, prevents you and/or your customers from accessing the premises. Civil authority coverage typically has a waiting period (e.g., 72 hours) before coverage can be triggered.
 
Here is an example of Civil Authority measures as issued by the governor and local authorities in Panama City Beach, FL:
       Update on Community Protection Against Coronavirus (COVID-19) for Panama City Beach, FL
·     All public gatherings at City facilities and property with more than 10 people are prohibited until May 1, 2020.
·     City recreational sports leagues, tournaments, fields, and special events are prohibited until May 1, 2020.
·     The Community Center at Lyndell Center is closed for the next 60 days.
·     All public places/businesses/restaurants/retail stores are encouraged to have alcohol-based hand sanitizer at entrance.
·     Citizens are encouraged to utilize online or telephone services to conduct business with the City. Restaurant patrons recommended to keep six-foot distance, per Gov. DeSantis.
·     Close all bars and nightclubs for 30 days, per Gov. DeSantis.
·     Limit public interaction with City services in: Utility billing, Code Enforcement, HR, Civil Service, building inspection, routine police and fire contact.
 
 
Florida Executive Order on COVID-19
https://www.pcbeach.org/wp-content/uploads/2020/03/COVID-19-GOVERNOR-RESTAURANT-ORDER_20200317121310.pdf
 
You may also have separate policies or manuscript policies and coverages which may provide certain coverages that respond to losses as a result of COVID-19 including:
 
·   Loss of Attraction Coverage
Manuscript policies may include additional coverage for Loss of Attraction, which includes the adverse effects on your business in reservation cancellations or its inability to accept reservations or provide accommodations as a result of an infectious or contagious disease.  Coverage may also be triggered should a local agency restrict access.
 
·   Event Cancellation Policy
For those companies that are in the event business, such as sporting arenas and concert venues, the most direct way to get insurance coverage for a pandemic is through an event cancelation policy.  Event cancelation policies are designed to provide coverage when events are forced to be canceled, including as a result of decisions made by a civil authority.
 
·   Directors & Officers Policy
A Directors and Officers policy may provide insurance coverage if investors or customers eventually sue a company and its Directors and Officers as a result of losses incurred from failing to take timely and appropriate action, including responding to a pandemic such as COVID-19. 
 
·   Supply Chain Policy: 
A Supply Chain insurance policy may cover business interruption resulting from a disrupted supply chain and does not require any losses to physical property. With this coverage, if a factory's supplier shut down due to a disease outbreak, the factory could be covered for any lost income, regardless of whether there was any property damage that caused the disruption.
 
·   Commercial General Liability
The standard commercial general liability policy includes “disease” under its definition of bodily injury. All policies may include exclusions for any liability arising out of communicable diseases, just like the exclusions found in personal liability insurance policies.
 
Measuring the Impact
Recovering financial damages incurred as a result of the COVID-19 pandemic is going to be incredibly challenging and will require expert insurance claim, business, and fiduciary guidance. 
 
Contact me and Strategic Claim Consultants immediately and we will review and assess your insurance policies at no cost in order to determine the likelihood that coverage may exist.
 
Once you have your policy reviewed and assessed, you will then need to determine what your losses actually are. Based on the reach of COVID-19 and its profound effects on the economy, it is uncertain just how long these losses will impact commerce around the country and to what extent. It is my professional recommendation that you or your organization take proactive measures and contact Strategic Claim Consultants to assess what coverages may be available in order for you to address the possible losses that you will inevitably incur. 

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