As a business owner, you have dutifully paid your business insurance premiums. You’ve done this through good times and bad, even if you had to borrow money to make your payments. Now – in the face of an unprecedented catastrophe and just when you need them most, your insurance company has abandoned you. They refuse to pay the claim for your business loss.
The fallout is horrible. You’ve had to lay off your work force, you don’t know when you’ll be able to open your doors again, and you fear for your livelihood. If things don’t turn around soon, you might never be able to reopen your doors for business. As terrible as all of this is, there is hope. You may have a claim against your insurance carrier for bad-faith refusal to cover your business loss from a government-ordered lock-down or shutdown linked to the Coronavirus / COVID 19 pandemic.
As reported in the media and various trade publications, chef Thomas Keller (of Napa’s celebrated restaurant The French Laundry) has shown how to fight back. When the local government ordered the closure of all restaurants in the area, his company (KRM Inc.) had to furlough 300 employees. KRM’s insurance company, The Hartford Fire Insurance Co. denied coverage. KRM’s attorney explained how the insurance industry is trying to avoid liability for Coronavirus losses: “
“To avoid payments for a civil authority shut down[,] the insurance industry is pushing out deceptive propaganda that the virus does not cause a dangerous condition to property…This is a lie, it’s untrue factually and legally.”
- Attorney John Houghtaling
Generally speaking, insurance industry lawyers are pushing the false argument that business-interruption policies require physical damage to property in order for coverage to be triggered. However, there are ways to beat insurance company arguments, and you don’t have to take a denial of coverage at face value. Insurance companies will argue what is necessary to prevent paying billions of dollars out for legitimate claims. You don’t have to let them get away with it – not when your business and the welfare of your family and of your employees are at stake.
Remember: An insurance company’s argument is not the law. Often, it’s a self-serving position, not supported by the facts or the law, designed to help save billions of dollars for the insurance industry, at the expense of insured business owners. Instead, the law requires insurers to honor their obligations in good faith, and Washington’s statutes against bad-faith behavior by insurance companies are some of the strongest in the country.
Often, insurance companies will argue that their policy exclusions are broader than they actually are. For instance, after the insurer denied coverage in the French Laundry (KRM) case,
the Plaintiff asserts that The Hartford Fire Insurance Co.’s contract does not have an exclusion for a viral pandemic (meaning that such pandemics should be covered). In addition, reports indicate the policy actually contained a “Property Choice Deluxe Form” that extended coverage for loss or damages due to a virus.
Not every business will be lucky enough to have purchased policy add-ons that might specifically extend coverage to damage from viruses, as seems to be true in the KRM case. However, there are generally applicable arguments that can help. For instance, as Mr. Houghtaling evidently argues for KRM, an order to shut down restaurants effectively constitutes a prohibition of access to any affected restaurant, which should trigger coverage requiring a physical impairment to access.
Nobody knows for sure how all of this will play out, because nothing like the Coronavirus pandemic has happened in modern times. What we DO know that the insurance industry will try to get away with denying as many potentially valid claims as it can. After all, they’ve done it before. This has been their go-to maneuver in other recent catastrophic scenarios, including in the aftermaths of Hurricane Katrina and Superstorm Sandy. If your insurance company has denied your claim for Coronavirus-related business losses, you can bet that will not change unless you fight for your rights.
Although the scale of the Coronavirus / Covid-19 disaster may be unprecedented, the good news is that recent history also shows the path to challenge bad-faith denials of claims by insurance companies, but that has not changed the law. The legal claims that have held insurance industries to account in the past can work again, and it is more important than ever that they do so. Millions of jobs are at risk, as is the well-being of entire communities across the country and the world.
If you run a restaurant or other business that has been forced to shut down due to a government order during the Coronavirus / Covid-19 Pandemic, and if your business insurance carrier has denied your claim, call us today. In this unprecedented crisis, NW Business Law stands with the small business community of our region, and we’re here to help you get your business back on its feet.