With the interruption of life as we know it since March 2020 due to the COVID-19 pandemic, it is no surprise that many businesses are hurting. This is especially true in the State of Florida where the economy is heavily reliant on the tourism industry. As of the writing of this article, there have been over one million confirmed cases of COVID-19 in Florida, with over twenty thousand deaths. This led to many businesses seeing interruptions on a grand scale throughout the state. In this article, we  discuss the role that business interruption insurance plays in helping a business recover from unexpected damages due to the COVID-19 pandemic.

What is Business/Commercial Interruption Insurance?

Business/commercial interruption insurance offers protections to businesses resulting in a loss of income due to a disaster.  In Florida, if a company cannot operate or only operates in a limited capacity due to a disaster, then the owner has the ability to file with business/commercial interruption insurance to recover the loss. The formula to determine the loss is as follows:

Operation Costs + Net Profits + Additional Costs due to Interruption = Claim Value

What is COVID-19 and How Should Businesses Prepare?

Although COVID-19 has been in the news for almost a year, it is important to review basic safety precautions. These recommendations come from the Centers for Disease Control and Prevention (CDC).  Not only will these precautions assist in allowing your business to operate but may also assist in avoiding future liability issues with your employees.

According to the CDC, COVID-19 is an airborne respiratory illness.  It is particularly dangerous to older individuals or anyone who suffers from pre-existing conditions that can impact their immunity.  Below are some steps that businesses can take as a precaution:

  • Send sick employees home
  • Ensure proper hygiene, especially hand washing
  • Create social distance working, such as creating pods for people to work in
  • Make sure the workplace has regular cleaning and disinfecting
  • Encourage the use of masks

Does Insurance Cover Loss Due To COVID-19?

Since COVID-19 was previously an unknown issue, it is highly unlikely that any insurance policies cover loss due to COVID-19.  Although some insurance policies do take into consideration loss due to illness, it is not a universal coverage and something that will need to be analyzed.

Is There Any Claim That Can Be Made Due To COVID-19?

It depends.  As mentioned above business or commercial insurance allows businesses to recover from loss due to business interruption.  In Florida, most of these business interruptions are covered for physical damage, such as after hurricanes, flooding, sinkholes, etc.  However, when the local, state, or federal governments make mandates on businesses to close for health and safety reasons, these mandates might rise to the level of business interruption under Florida law.

In a recent case, Urogynecology Specialist of Florida, LLC v Sentinel Insurance Company, Ltd, a Florida Federal Court ruled that under the Governor’s Executive Order in March 2020 closing non-essential businesses, the claimant was entitled to lost revenue under an “all-risk” insurance policy since they were deprived the use of their property.

Suffered Loss In Business Due To COVID-19

If you suffered a loss in business due to COVID-19, contact the business experts at Dowd Law.  We will help review your business/commercial policies and assist you in filing a claim with your insurance company.