Insurance Coverage for Businesses Affected by Evolving COVID-19 Government Orders
Evolving government orders will affect the way many retail businesses operate and the potential insurance available for losses and expenses. For instance, on April 28, 2020, the State Health Officer of Alabama issued an Order allowing some businesses to reopen, but under strict sanitation and social distancing guidelines. Retail stores, for example, will be allowed to reopen but must maintain a maximum occupancy rate of 50%. While a partial opening may restore some level of activity, because these businesses must operate at a reduced capacity, their operations will not return to normal. Beyond that, while some states are loosening social distancing requirements, others have extended them. Indeed, on the same day that Alabama announced its partial reopening, the Governor of Massachusetts extended the closures of non-essential businesses. Regardless of location, many businesses will likely sustain substantial losses because of these orders, and will incur expenses to comply with evolving requirements and operational guidelines.
Most commercial property policies cover loss of business income and extra expenses incurred due to an interruption to normal business operations. For a discussion on the relevant coverage issues, please reference the blog post by Syed S. Ahmad, Sergio F. Oehninger, and Yaniel Abreu of Hunton Andrews Kurth LLP. The post is titled “No Mask, No Service – Evolving COVID-19 Orders May Support Insurance Coverage for Retailers’ Losses” and was published on the Hunton Retail Law Resource Blog on April 28, 2020. Among other things, the blog post discusses how (i) the presence of COVID-19 on insured property may constitute physical loss or damage under commercial property policies, (ii) evolving governmental orders can implicate civil authority coverage, and (iii) insureds may recover losses from business interruption due to the COVID-19 pandemic, more generally.
As discussed in the blog post, there are many avenues to insurance recovery for retailers and other businesses impacted by the economic downturn from COVID-19. Importantly, all policyholders should carefully analyze their policies and understand the various coverages comprising their insurance program. This will allow policyholders to identify and pursue all potentially available insurance.