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Everything you need to know about BMD and the industry.

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

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.

BMD Appellate Win Clarifies Waiver of Contractual Right to Arbitrate

Brennan, Manna & Diamond, LLC attorneys David M. Scott, Lucas K. Palmer, and Krista D. Warren prevailed before the United States Court of Appeals for the Sixth Circuit regarding if/when a party waives a contractual right to arbitrate. Borror Property Management, LLC v. Oro Karric North, LLC, No. 20-3146 (the “Decision”).

Relief for Ohio Under the Federal American Rescue Plan Act

On March 11, 2021, President Biden signed the American Rescue Plan Act (the “Act”) — a $1.9 trillion COVID-19 relief package — a significant portion of which will be directed to the State of Ohio to support economic recovery, as outlined below.

Cleveland Manufacturer Violated OFAC Sanctions By Allowing Shipments To Iran - Know Your Customer and Know Their Customer

UniControl, Inc., a Cleveland, Ohio manufacturer of process controls, airflow pressure switches, boiler controls and other instruments, agreed to pay the Office of Foreign Assets Control “OFAC,” the financial enforcement agency of the U.S. Treasury Department, $216,464 to settle its liabilities for violations of the Iran Sanctions Program. OFAC stated that “this enforcement action highlights the importance of identifying and assessing multiple warning signs that indicate a foreign trade partner may be re-exporting goods to a sanctioned jurisdiction.”

Ohio Breach of Contract Statute of Limitations Shortened to 6 Years

On March 16, 2021, Governor DeWine signed into law S.B. 13 which shortens Ohio’s statute of limitations for filing lawsuits based on breach of contract. A statute of limitation is the time period within which a party must file a lawsuit before its claim expires as a matter of law.

Chinese Product Tariff Challenge Causes Flurry of Importer Lawsuits

A lawsuit filed late in 2020 at the U.S. Court of International Trade (“CIT”) challenging the U.S. Trade Representative’s (USTR) implementation of Section 301 “List 3” and “List 4” duties on products from China, HMTX Industries LLC et al. v. United States (Court No. 20-00177), has resulted in the filing of thousands of additional lawsuits brought by other affected importers. There are now 3,700+ companies added to the list, including Ford, Home Depot, Target, Tesla, and Walgreens, along with many other smaller importers.