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Articles Posted in Business Law

law-40007_1280-247x300As plaintiffs’ lawyers representing both people and businesses, we are no strangers to dealing with insurance companies and making them pay. We have seen some very interesting developments in the insurance world since the spread of COVID-19.

The first thing we noticed: adjusters and defense attorneys started calling and offering to settle cases. We were not surprised. The insurers’ money is tied up in the markets, and the markets suddenly became uncertain. In any time of great uncertainty, people want to regain certainty. One of the things worth knowing is that big business is often willing to pay more to obtain certainty. And insurance companies are renowned for being risk-averse, certainty-seeking enterprises. (Just watch Ben Stiller in the movie “Along Came Polly.”)

The second thing we saw: insurance companies started denying claims under commercial policies for business interruption insurance coverage. Businesses everywhere are shutting down or slowing down in the wake of COVID-19. Many paid insurance premiums for years, thinking they had business interruption insurance coverage. Now, when they need it, the insurance companies are denying the claims.

insurance-3113180_1920-300x200The president recently got himself into hot water with insurance companies when he spoke about the need for insurers to make good and pay up on claims for business interruption losses in the wake of COVID-19.

In a coronavirus briefing, the president went on the offensive, criticizing insurers for denying claims by businesses that have been paying premiums for decades:

“Business interruption insurance . . . when I was in private, I had business interruption . . . When my business was interrupted through a hurricane or whatever it may be . . . if I had it [business interruption insurance], I’d expect to be paid.  You have people — I speak mostly to the restauranteurs, where they have a restaurant, they’ve been paying for 25, 30, 35 years — business interruption.  They’ve never needed it.  All of a sudden, they need it.  And I’m very good at reading language . . . And I don’t see the word ‘pandemic’ mentioned [in the policies] . . . I would like to see the insurance companies pay if they need to pay, if it’s fair. . . But business interruption insurance, that’s getting a lot of money to a lot of people.  And they’ve been paying for years . . .  they’ve been paying a lot of money for a lot of years for the privilege of having it.  And then when they finally need it, the insurance company says, ‘We’re not going to give it.’ We can’t let that happen.”

business-contract-962355_1920-1-1024x768The web of commercial contracts between businesses is essential to our community. Under ordinary circumstances, the courts provide the mechanism to enforce contracts and provide the commercial certainty that communities need for a thriving economy.

These are not ordinary times.

Few commercial contracts contemplated a “global pandemic” and you probably won’t find the term in your written agreements. Yet, as shops close and we shelter in place, businesses are wondering where they stand regarding their contractual obligations, which may have become impossible to perform. Some businesses are unable to perform because they have been ordered to close. Other businesses are unable to perform due to supply chain interruptions. Others are unable to perform because their employees are quarantined.

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