Hallett Whipple Weyrens, is investigating the viability of business interruption insurance coverage for restaurants and other businesses forced to close because of the COVID-19 outbreak. The outbreak shuttered all non-essential businesses, creating uncertainty and severe financial harm. As the losses mount, the federal government is promising relief through the CARES Act and the state is pledging help as well. Our hope is to tap into insurance reserves to provide an additional source of support for Maine businesses.
Many commercial liability policies provide coverage for business interruptions caused by an order of a civil authority, such as the Governor's March 31, 2020 stay-at-home Order. To trigger this coverage, however, there is typically some requirement that the closure involve property damage or impairment to a building or property other than the insured's—for example, a public official orders the evacuation of an area because a wild fire; during the fire, a handful of buildings are damaged, but not the property of the business owner filing an insurance claim.
In the context of the COVID-19 pandemic, the insurance industry takes the position that there is no property damage or impairment caused by the virus. Although this position is not necessarily wrong or without support, we believe that there is a strong argument to the contrary because the virus contaminates surfaces for an extended period—sometimes days—creating a hazardous condition. Courts have held that the presence of a hazardous substance or noxious gas that requires a business to close can constitute property damage, and we want to make the case that the presence of a highly-contagious virus is no different.
If your business is interested in exploring potential insurance coverage for COVID-related business interruptions, please contact our office today at www.hww.law or calling (207) 775-4255 for an evaluation of your business interruption coverage at no cost.