Few states were hit as hard, or as early, by the coronavirus pandemic as New York. As such, it was also one of the first states to enact a quarantine, and one of the first to get the disease under a measure of control. As infections have begun to skyrocket and more people are being hospitalized for COVID-19, businesses are now readying themselves for another possible quarantine. Continue reading “Businesses Brace for Another Possible Quarantine”
If you have business interruption insurance, then it is possible you may have looked at the provisions of your insurance contract and seen the phrase “direct physical loss.” This seemingly simple phrase can have a significant impact on whether you are able to collect on your policy, especially if you were forced to shut down due to COVID-19. So what is direct physical loss, and how can that affect your business interruption insurance claim?
What is Business Interruption Insurance?
Business interruption insurance is a kind of insurance that covers losses you suffer due to being forced to temporarily close your business. Rather than dealing with the direct physical costs, though, it addresses lost income due to being unable to operate your business as normal. For example, it might not cover water or mold damage you suffered in a flood, but it would cover your lost income for the time it took for the damage to be repaired.
How Do I Get Business Interruption Insurance?
There are two primary ways for a business owner to get business interruption insurance. The first is to specifically purchase a business interruption insurance policy from an insurer that offers it. The second is to have a business interruption clause as part of a general business insurance contract. With this second type of insurance, because many business owners may have business interruption insurance already and not know it. You should review your general business insurance policy. It’s always a good idea to know what you are and are not covered for.
Defining Direct Physical Loss
Many business interruption insurance contracts only cover business interruptions caused by “direct physical loss” to the business. Generally speaking, this has been interpreted by the courts to mean disasters that caused direct harm to the physical property of the business. For example, damage caused by a natural disaster like a fire, flood, or earthquake might qualify. So would damage caused by burglars, rioters, or vandals.
The Coronavirus Conundrum
One of the primary issues going through the courts right now is the issue of whether business interruptions caused by the coronavirus qualify as “direct physical loss.” The coronavirus, also known as COVID-19, has devastated businesses across the country, and New York was particularly hard-hit early in the pandemic. Businesses that lost income due to the COVID-19 quarantine have been looking to business interruption insurance to cover their losses, with mixed results.
Some courts have adopted a more general definition of the term and have been willing to expand the definition from its traditional boundaries to include coronavirus-related closures. Other courts, however, have kept to a strict definition of direct physical loss, resulting in COVID-19 claims being denied outright. As it stands, the issue remains unsettled law, both in New York and across the country.
Finding a Way Past Direct Physical Loss
Even if you cannot get a court to agree that coronavirus-related losses count as a direct physical loss, you may have other avenues open to you to recover under business interruption insurance. For example, if your contract has “civil authority” coverage, you may be able to get payment due to being forced to close by the government. Alternately, you may have a clause in your contract that covers closures due to illness or infectious disease. However, you cannot be certain until you have consulted with an attorney.
If you are a business owner with a business interruption insurance plan, and you want to recover for losses suffered due to the coronavirus pandemic, you should seek out a business law attorney with experience in the field. The business law attorneys at Blodnick, Fazio & Clark are skilled and knowledgeable in the areas of business law and commercial transactions. With offices conveniently located in Garden City, Nassau County, and Babylon, Suffolk County, the firm provides high-quality legal care at reasonable prices. If you require legal assistance concerning business startups, formation, corporate acquisitions and mergers, corporate restructuring, or another business matter, call (516) 280-7105 or fill out our contact form for a free consultation.
In what may be a promising turn of events for people with business interruption insurance, the Eighth Circuit of the United States Court of Appeals has just ruled that losses related to the coronavirus pandemic are a “direct physical loss.” This ruling is important as it signals how other courts may rule when confronted with similar issues, and with many businesses forced to close due to the pandemic, they are looking for any way to stave off their losses. Unsurprisingly, however, insurers who issued these policies are less than pleased at the court’s interpretation of the law. Continue reading “8th Circuit: Coronavirus Losses Are a “Direct Physical Loss””
Although many aspects related to the coronavirus quarantine have been relaxed across New York State, the executive order mandating the use of face masks in public indoor locations remains in effect. While most people have complied with this requirement willingly, a handful of people have vocally objected, often taking out their frustration at the policy on the workers and businesses who are often tasked with enforcing it. How is a business supposed to handle people objecting to wearing a face mask without inviting legal trouble to their doorstep? Continue reading “The Difficulties with Enforcing Face Mask Policies in Commercial Settings”
In the first case of its kind to be decided across the country, an Indiana Court has dismissed a claim by a business attempting to recover money under its business interruption insurance due to the coronavirus. The case has caught a great deal of attention, as it may presage other similar cases being decided around the country, including in New York, where businesses struggled to stay open during the coronavirus quarantine. However, while it is tempting to ascribe a great deal of significance to this case, attempting to apply the ruling widely may be difficult. Continue reading “COVID Business Interruption Insurance Case Dismissed by Indiana Court”
The coronavirus pandemic has resulted in businesses across the country being closed or forced to operation on a limited basis. Many businesses have business interruption insurance, insurance policies intended to cover instances where they cannot operate their business. The question these business owners have is this: will their business interruption insurance cover COVID-related closures and disruptions, or are they going to be left to handle the repercussions of the pandemic themselves? Continue reading “Will Business Interruption Insurance Cover COVID Interruptions?”
The president of Arrayit, a publicly traded medical testing company, has been charged with securities fraud and conspiracy to commit healthcare fraud after it was revealed he had directed the company to submit false claims for allergy and COVID-19 tests. These charges include the company allegedly paying kickbacks to doctors who participated in the scheme. The charges are the first in the country against a medical company accused of exploiting the coronavirus crisis for their personal gain. Continue reading “Lab Executive Charged with Fraud in COVID and Allergy Testing”
With the stay-at-home order in New York now extended to May 28 for some parts of the state, many small business owners are increasingly seeking ways to survive what will soon be an entire Spring under quarantine. While many businesses have moved to telework arrangements where possible, many other “nonessential businesses” have been forced to remain closed for the duration of the quarantine. For some businesses seeking to survive, they have come up with a novel approach: finding a way to shift to be considered an “essential” business. Continue reading “Small Business Owners Seek Essential Status to Remain Open”
The coronavirus has occupied the attention of America for months now, with people quarantined in their homes to avoid contracting or spreading the disease. This effort to slow the spread of the coronavirus, however, has had a deleterious effect on the economy, and businesses are eager to return to normal so they can begin making money like they did before. Employees, however, are less than enthusiastic about returning to work in the middle of a pandemic, and they have been turning to the courts for a remedy. Continue reading “Employers Brace for Employee Coronavirus Exposure Suits”
Amid the coronavirus pandemic, people are desperate for anything that might protect them from the disease or cure them if they have it. While plenty of companies are now hard at work on legitimate means of addressing the crisis, there have also been many people looking to cash in on people’s desperation. The Federal Trade Commission (FTC) has begun seriously cracking down on these fraudulent actors, sending out letters to dozens of companies making false or unsubstantiated claims about their products and their ability to fight the virus. Continue reading “FTC Addresses Rash of False and Unsubstantiated Coronavirus Claims”