For years, businesses nationwide have purchased expensive insurance policies to protect them from unknown risk and unforeseeable losses. Now, a growing number of business owners, who are in the midst of suffering existential business losses, are discovering their safety nets have been pulled out from underneath them.
Despite collecting billions in premiums over the years, some insurers are now turning their backs on policyholders by denying claims for business interruption insurance stemming from losses suffered at the hands of the COVID-19 pandemic. Without this money, many business owners will be unable to reopen or hire back laid-off employees.
Business interruption insurance is included in many property insurance policies but has rarely been needed on such a global scale. Coverage is typically triggered when property is physically damaged or unusable as a result of a fire or natural disaster. However, some policies also contain a civil authority clause, which covers losses if the government chooses to deny access to a business. For example, this can occur when a fire at a neighboring property has made the area unsafe or in these times when a non-essential business is shuttered.
What About Exclusions?
While some insurance carriers moved to exclude coverage for viruses after the SARS pandemic that occurred between 2002-2004, many policies do not have such exclusions. Nevertheless, an increasing number of insurance companies are improperly refusing to honor their insurance contracts.
These denials have recently garnered attention from US lawmakers. Last month, 18 Congressional members wrote a letter to trade associations for insurers urging them to “work with your member companies and brokers to recognize financial loss due to COVID-19 as part of policyholders’ business interruption coverage.”
Potential Claims
When a policyholder discovers their business-interruption claim has been denied, the battle is not over. A carrier’s improper denial of coverage may give rise to claims for bad faith, unfair settlement practices, breach of contract, as well as various Georgia code violations.
Penn Law works with businesses seeking justice against insurers that have improperly refused to honor their agreements by denying coverage. Our experienced trial lawyers have successfully gone to bat against nearly every major insurance carrier, recovering millions for our clients.
The issue is simple: businesses have held up their end of the bargain, so insurers must likewise honor their contractual obligations by providing coverage. As the nation recovers from the COVID-19 pandemic, the financial stability of Georgia businesses will be imperative to rebuilding our economy. Penn Law is proudly committed to supporting this effort by doing everything in our power to ensure Georgia businesses are made whole.