Philadelphia Businesses Are Fighting for Deserved Insurance Coverage to Offset Losses Related to COVID-19
By Dean I Weitzman, Esq. on June 11th, 2020
The COVID-19 pandemic has negatively affected almost every Philadelphia businesses in one way or another. Indeed, it has been estimated that small business across the country are losing $383 billion per month, despite the best efforts of many businesses to creatively generating income in other ways. For many business owners, the reality of the sudden loss of income was only worsened by their insurance company’s refusal to provide what the business owner thought were promised benefits under the business interruption portion of their insurance policy.
Business interruption insurance is a type of business insurance coverage that replaces a business’ lost income in the event of a sudden and unexpected disaster. The classic example of a business interruption claim is when there is a fire that requires a business temporarily shut their doors. In such cases, a business owner could file a claim with their insurance company, seeking to recover the income that they would have earned had the business remained open. Business interruption insurance can also cover certain business expenses such as employee wages, taxes, installment loan payments, as well as the cost of temporarily relocating a business.
Typically, business interruption insurance is not sold as a separate policy, but is included in a comprehensive business insurance policy or as a rider on an existing policy. That said, many Philadelphia business carry business interruption insurance, even if they do not realize that to be the case.
However, as is too often the case when dealing with an insurance company, many business owners are not getting what they thought they paid for. Business interruption insurance claims, like all insurance claims, are governed by the specific policy language in the insurance contract. Thus, when a business owner files a business interruption claim, the insurance company will refer to the policy to determine if the claim should be approved. Of course, insurance companies operate to generate a profit and, to do so, they must take in more in insurance premiums than they pay out in claims. Not surprisingly, insurance companies routinely look for ways to deny claims. This is especially the case in situations like the COVID-19 pandemic, where there may be a significant number of claims.
In the case of COVID-19 related claims, insurance companies are looking to language in the insurance policy stating that a covered claim is one in which a business must shut its doors due to some loss of property or damage to property. To most insurance companies, the spread of the COVID-19 virus, as well as the government’s response in shutting down large portions of the economy, does not constitute loss of property or damage to property. Thus, almost universally, insurance companies in the Commonwealth and across the country have been denying these claims. This leaves many Philly business owners wondering what they have been paying for and whether there is anything they can do to obtain the benefits they thought they already had.
One argument that many Philly-area businesses are making is that their losses are not related to the virus itself, but instead due to the government’s response to the virus. This distinction, businesses claim, should trigger a policy based on the policy language that covers unforeseeable losses caused by the action of a civil authority. Of course, insurance companies are prepared for this argument, and respond that, while the losses may have been triggered by government action, the government action was due to the virus, rather than some other physical threat to property.
Pennsylvania lawmakers have been hearing pleas from business owners since the beginning of the pandemic, and have proposed several pieces of legislation that would require insurance companies to prove coverage to businesses affected by COVID-19. To do this, the proposed bills would define key terms in Pennsylvania business insurance policies. For example, Senate Bill 1127 provides that “if a person positively identified as having been infected with COVID-19 has been present” in a building, “that area of business activity shall be deemed to have experienced property damage.” This would negate an insurance company’s ability to deny a claim based on the lack of actual property damage.
Of course, insurance companies are opposed to any legislation that would require they pay out on claims they would rather deny. Not surprisingly, a representative of the American Property Casualty Insurance Association said in a statement last month that any legal action or legislation requiring insurance companies to retroactively cover viruses “would immediately subject insurers to claim payment liability that threatens [their] solvency.” Others question the validity of this claim, and note that, absent such coverage, some small businesses across the state will undoubtedly be forced to close down permanently.
Currently, the situation facing Philly small businesses is uncertain when it comes to business interruption insurance claims. However, many businesses – large and small – across the state have filed claims against insurance companies that have denied their claims. Some have pushed for courts to consolidate and expedite these cases, urging that they are of critical importance. Regardless, businesses will likely be in for a fight when it comes to getting the benefits they thought they have been paying for, and may need to go up against the insurance company – and their lawyers – in court.
Consult with a Knowledgeable Business Insurance Attorney Today
Insurance companies can be notoriously difficult to work with. While Philadelphia business owners may have done everything they thought possible to protect their business from the effect of something such as the COVID-19 pandemic, insurance companies may still deny a claim. The Philly insurance dispute attorneys at MyPhillyLawyer have extensive experience enforcing business owners’ rights under their insurance policies. MyPhillyLawyer attorneys have decades of collective experience holding insurance companies to their obligations, and standing up for the rights of businesses as well as individuals who have been injured in all types of personal injury accidents. Business owners interested in learning more can contact MyPhillyLawyer at 215-254-6391 locally, or toll-free at 866-907-2231. The attorneys at MyPhillylawyer can also be reached through the firm’s online form.