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Only Courts Can Decide if COVID-19 Chaos is Included Under Business Interruption Coverage

Client Alert

Despite paying insurance premiums for years, businesses are now being told by insurance companies and brokers that the business interruption coverage in their policy does not apply to coronavirus losses. However, the question of whether business interruption coverage extends to losses caused by the current pandemic will ultimately be answered by the courts, not insurance carriers. These legal decisions will depend upon the specific language of the policy and the facts and circumstances surrounding the claim. For more information on the specific issues regarding business interruption coverage claims, please see the prior guidance provided by BMD here.

Lawsuits are being filed in Ohio and many other states to challenge coverage denials based on coronavirus losses. Insurance companies will vigorously defend these claims at all stages, including at the pre-suit claim level. Currently, insurance carriers are  requiring businesses to submit substantial documentation after a proof of loss has been submitted. Intentional or not,  requiring businesses to submit substantial documentation, including proof that the coronavirus was present at their location, will likely dissuade a number of businesses from asserting claims and lessen the number of lawsuits challenging coverage denials.

While there are legislative efforts to provide business interruption coverage to small businesses in Ohio and other states, the legislative process will take time, and the outcome is uncertain.

In the interim, what should be businesses being doing to preserve their rights to pursue relief under their insurance policies? Business should:

  1. Request copies of all insurance policies from brokers or directly from insurers. While business interruption coverage concerns the property coverage included in almost all commercial policies, other coverages may exist and apply, depending upon the industry.

  2. Gather documentation to support any coronavirus insurance claims that the business intends to assert. The type and nature of documentation will largely depend upon the business involved. For example, restaurants, bars, movie theaters, salons, and fitness centers in Ohio should obtain a copy of the pertinent order shutting down their establishments. Businesses should also gather all financial documentation demonstrating losses from the shutdown or earlier, depending upon the circumstances.

  3. Consider filing a proof of claim to preserve the rights of the business under the insurance policy. While this can be done independently, many businesses would benefit from discussing this option or obtaining assistance from insurance brokers or legal counsel to submit a proof of loss or claim in accordance with the terms of the insurance policy.

  4. Consult with legal counsel about insurance policies and whether coverage may exist for coronavirus losses. Not all policies include the same language or exclusions. Furthermore, this issue is developing based on the arguments and opinions adopted by Courts in Ohio and other states. It will be important to discuss with counsel how to substantiate a claim and the options for pursuing claims in Court. Finally, given the multitude of legal issues presented by the novel coronavirus, businesses should also discuss their current policies and potential insurance needs.

Businesses should not be discouraged by the multitude of articles disseminated by the insurance industry over the last month to dissuade businesses from filing coronavirus claims. Insurance coverage is always dependent upon the language of the policy and the facts and circumstances surrounding the claims as presented. The courts, not the insurance industry, decide whether coverage exists. For this reason, it is important to be proactive now to preserve your rights and know your options.

For more information, please contact Kyle A. Johnson at kajohnson@bmdllc.com or 330.374.7475 or Hal DeSaussure at hdesaussure@bmdllc.com or 330.436.8914.


Community Banks: Collaboration, not isolation, is the key to protecting/ enhancing the cannabis business you pioneered

As we prepare for the plenary session of the informal institutional cannabis lenders community announced in my previous article, I am pleased to advise that participants now include 5 of the best-known dedicated loan funds; a select group of commercial banks ranging in size from single state community banks to mid-size regionals making cannabis loans into the mid-8 figures; and, a syndicator of credit union cannabis loans.

Inflation Reduction Act: Healthcare Provisions

On August 16, 2022, President Joe Biden signed into law the Inflation Reduction Act (the “Act”), a landmark climate, healthcare, and tax bill. Though the Act’s climate provisions have received most of the media attention, the healthcare aspects of the Act present some of the most significant changes to the American healthcare system since the passage of the Affordable Care Act.

The Current State of Assignment of Benefits Litigation in Florida

On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney’s fees, with respect to assignment of benefits (“AOB”) property insurance litigation. One-way attorney’s fees are a longstanding problem in Florida and the reforms come at a time when AOB litigation increasingly affects homeowners in a negative way.

Proposed Community Revitalization Grants for Ohio Projects

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Ohio Senate Bill 225 Paves the Way for Greater Investment in Opportunity Zones and Historic Districts

Ohio Senate Bill 225 is poised to make dramatic enhancements to certain tax credit programs in Ohio, specifically those surrounding investments in “Opportunity Funds” and historic buildings. Signed into law by Governor Mike DeWine in June 2022, the Bill is positive news for real estate developers working to revitalize Ohio communities with investment and rehabilitation projects.