Insurance Coverage for COVID 19 Losses the Policyholders’ Perspective / HealthChoice

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oh hello and welcome everyone to this Better Business Bureau building trust in trying times webinar I'm your host Jamie Dillon and it's so good to have you with us today this is a live webinar but if you hear something that you'd like to share with colleagues or to revisit at a later time we do have a recording posted by the end of the day on our YouTube channel at youtube.com slash BBB in wp today's topic insurance coverage for coated night teen losses from the perspective of the business policyholder

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so rolling all towns in cities and states across the u.s. prompted by covet 19 have many companies checking the fine print on their business insurance policies all businesses should be checking our policies immediately to see if a payout under their business interruption insurance is available but there are intricacies to each policy in each state and that's why we're here today but before I introduce today's guests I'd like to touch on a few housekeeping items first this is an interactive webcast so as we go through the presentation and conversation please

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use that Q&A box at the bottom of your zoom window you'll be able to see what others are asking and if you see a question that you really like and want the answer to click that little thumbs up icon to vote up that question when the time comes towards the end of this webinar we'll ask those questions that matter most to our audience first so now on to our guests today we're so fortunate to have Tristen Swanson partner at Miller Nash Graham & Dunn LLP based in Seattle Washington with offices in Vancouver Washington Long Beach

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California in Portland Oregon Tristan joined Miller Nash Graham and dumb done as a partner in April of 2019 his practice focuses on construction real estate and insurance coverage disputes he represents contractors subcontractors owners landlords and developers and has achieved successful outcomes for clients in state and federal courts and in alternative dispute proceedings tristan provides and prides himself on his ability to help clients reach successful outcomes by precisely tailoring strategies for each

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client's unique situation welcome Tristan thanks Jamie it's great to be here with the Better Business Bureau I'm here to talk about what some people find some time a little dry which is insurance coverage so I'll try to keep it interesting keep it big picture I'm sorry ously an important issue business interruption coverage is something that almost everyone has and everyone's business has been interrupted so they're looking there to see what relief if any can be had so I'll start by talking in big picture about you know

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what does this coverage stay you know what are the threshold issues to getting it we'll talk about some other coverages that almost every policyholder has inside their commercial property policy we'll talk about what I'm seeing as far as pushback from the insurance companies and here's a heads up they're pushing back across the board and then what can policyholders do now to protect themselves and preserve their claims so jumping right in what is business interruption coverage classic example

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was you know my restaurant had a fire because it burned down I had no income but I continuing fixed costs that's what business interruption coverage is meant to cover my income loss because my premises were destroyed and I could not generate revenue as a result and so that's what we've got going on as far as the basic premise of it it's usually paired with something called extra expense coverage imagine if your office Park burned down now I've got to relocate all my employees that's an

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extra expense and then it's also compared with continued business interruption coverage so I opened back up but no one knew I was open it took a while for me to ramp back up those three coverages are paired together they exist in almost every single policy if you used a commercial broker to purchase a commercial property policy in all likelihood you have some form or version of business interruption coverage so what does it say how do I get into that

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main insuring clause the main thing is that it says that they're gonna pay for your loss of business income due to us to suspension in your operations and that that must be caused by direct physical loss of or damage to cover property that's the so issue did I experience direct physical loss of or damage to my insured premises insurance company generally gonna say no no good 19-2 insurance

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companies is not direct physical loss for damage they want to see some sort of wild structural change they'd like to see a fire a windstorm some kind of flood that's the insurance industry's version of a direct physical loss or damage to property but they're basically wrong about that courts across the country have found that all sorts of things that aren't structural changes to property can be direct physical loss or damage courts have found that ecoli

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inside well water can be direct physical loss or damage they found that asbestos fibers microscopic little asbestos fibers can be direct lost or damaged in a really kind of great fact pattern out of Florida they found that the odor of cat urine can be direct physical loss or damage and then there's all sorts of cases as saying that noxious gases ammonia gasoline wildfire smoke these can all be direct physical loss for damage now

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every state's law is different you know and Washington were very Pro Policy Lauder state and that could be different in the state in which you're sitting but in general this is an issue that I think is gonna be a result in policy holders favor so I think we start from a place where most policy owners are probably inside the insuring clause what about this other coverage and this is coverage is called civil authority coverage has been getting a lot of press and this idea the idea behind this coverage is

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well my neighbor had a fire and now I can't open my business the fire marshal said you're closed until we do a full assessment and because of that I'm sustaining income loss and generally what you see for this coverage is you know I need to direct physical loss or damage somewhere besides at my place I need that to be have been caused by the covered cause of loss which can mean anything that's not exclude and that's to occur within a certain

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radius of me so a lot of people are looking here for a good reason because it seems like Koba ninth team fits this mold pretty well and I'll talk about about that a little bit more later another interesting coverage out there is that in fact insurance industry sold pandemic endorsements and believe it or not you know these exist out there not a lot of policies out of them but certainly worth checking yours these are triggered by you know public authority shutting down a location doing

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an epidemic which it's out of fact patterns for folks out there and it actually defines covered disease as a coronavirus disease so when I first saw this I said you know what there is no way an insurance company isn't gonna accept coverage when they issued a product like this lo and behold two weeks later I got the denial letter and the argument was you know we actually meant to cover up their coronavirus disease it's not this one if you can believe it so I think this

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should make everyone feel better no matter what you purchased you're gonna get a denial and even these people who had the foresight to get a pandemic endorsement got denied it's the reason why I think that it's important to close look at your policy and really think about you know whether or not you know the pushback is necessary because people in these in these shoes certainly I think shouldn't be pushing back well there's other potentially applicable coverage out there too so a lot of these coverages are sold as endorsements to policies or add-ons so if you're in the

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restaurant industry for example it's very common to have a communicable disease event coverage there's trade disruption insurance there's an event cancellation insurance there's travel insurance trade name restoration insurance they go on and on I I don't know them all but they're out there the main thing is that you know you want to consider the policy holistically you want to look outside of that main insuring class and civil authority coverage because there might be add-ons to your policy that independently provide grounds for coverage and it's important to evaluate that and make sure

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that your insurance company is also evaluating it so what about insurance companies what are they doing they are denying claims as of right now I have yet to hear about a single claim relative to code 19 business income once accepted that means the pandemic endorsement folks are not being denied people who have no virus exclusions and their policies are being tonight everyone's being denied and the reason for that isn't probably because your policy or your set of facts is

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uniquely bad and therefore based on those uniquely bad facts you should just accept it no it's almost an existential crisis if an insurance company pays out on one claim here that probably means they need to pay out on ten thousand claims and so they're looking at a billion dollar loss and right now the insurance industry is just not willing to accept that prospect whatsoever until on some level they're forced to do so and so you're just seeing a blanket

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across-the-board denial these are written on templates I've seen lots of denials where the wrong inch Birds name is mentioned and that's just because the gesture forgot to defeat the control find/replace well and just went right through it and didn't even bother normal checking it that's how bad these snails are because again they're just going them out to everyone on a on a complete template basis so what's in these denials well first they're saying there was no direct physical Veloster damage

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and as you know I just talked about I think that's a loser for the way I think most courts the virus even if it's microscopic as a corporal existence and it is direct physical loss or damage and they're saying well on an evidentiary basis can you show me that you swab the wall of your business and found that you had coronavirus on site well the answers of course not people couldn't even get tests so we're we swabbing the walls of businesses absolutely not and this is going to be an interesting battle

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because it's almost a science battle you know we're saying that any place of public accommodation any time where large groups of people were working together essentially in a Nemec situation there's contamination where there is the imminent risk of contamination and the more we know about the corona virus that might have existed for months earlier we can essentially assume in most instances that say a restaurant had someone who was sick inside it and at some point corona virus

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existed on some surface and the question is gonna be as the court gonna say that's good enough or are they gonna try to take this insurance company line which is that well I mean I'm sorry you couldn't you know test every counter of your restaurant in February for crota virus but unless you show that to us you're getting nowhere the next one they're also saying is that well access to your premises was not prohibited you could do takeout orders and therefore you weren't prohibited from access I

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think that's a loser that's not what the insurance policies say there's no way to read some of these proclamations and say that access was not prohibited by a serval Authority and the fact that you as an insured were mitigating your losses you know trying to essentially benefit the insurance company with their employees by staying open I don't think that's a winner for the insurance companies but it's showing up in almost every single denial our biggest issue that policy versus I have and I'll be frank with you it is an issue is that a

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lot of these commercial property policies have virus exclusions and cut to the chase what most of these virus exclusions say is that you've got a big chain of causation if a virus shows up anywhere in that chain of causation that produces a loss you're out there's no coverage whatsoever know one of the things to note talk about these just remember first off not every single one of these policies has one in my

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experience it's probably about an 85 percent average maybe a little bit less but some major insurance companies just forgot to put these in Berkeley North America Western national Lloyd's of London society insurance Cincinnati Harvard whatever reason these just aren't in their policies and for folks who don't have a virus exclusion in their policy depending on what state they are got a pretty good get a pretty good claim for coverage and then not every virus exclusion is

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written the same so for example you'll see a lot of exclusions for mold and bacteria well some insurance companies are saying well that's that's a virus exclusion but it's not you know bacteria is different than a virus and if they're trying to stand behind that that's not gonna work also some of these virus exclusions - every single one of these coverage parts so you may you know may exclude coverage for but it doesn't necessarily exclude coverage for all

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types of losses and then finally and this is gonna go in the weeds a little bit there's this idea that certain states have of the efficient proximate cause rule and that's all about how in a chain of causation even if there is some sort of excluded event coverage is still low I've got a little video to try to make this presentation more interesting it's all about chain of causation hopefully it loads we're gonna have

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success here all right hopefully that wasn't too graphic but here's the idea in a typical loss you have a chain of causation and you know one thing leads to another leads to another leads to another and now you have the loss what the Fisher proximate cause rule says is that if the predominant cause which they also call the efficient cause of the loss is covered it doesn't matter if there was some sort of excluded event in that chain of causation you still have to

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provide coverage regardless if a virus showed up so you know in this example in this last video if you know hearing aid malfunction was the predominant cause of loss but everything else in there was excluded you would still have coverage depending on how your state's efficient proximate cause rule works because that was a covered cause of loss and that was the predominant cause of loss so let's see that play out here in a civil

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authority context with copa90 so that you know civil authority coverage says that civil authority must have prohibited access to your hands and that prohibition of access must arise from direct physical loss or damage to property other than at such location so you're sitting there you're saying well the virus is direct physical loss or damage I don't have a case on my premises but we know that the virus was all around me hey my business might only

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be a mile from the restaurant and then so we feel like that's good we're in that first bit of insuring language and then it says and that must be caused by or result from a covered cause of loss so the prohibition of access must be caused by original from covered accounts of loss okay well my insurance policy does not say that for example governor Inslee's Proclamation is an excluded parallel i've got direct physical loss

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or damage that did not occur at my restaurant or my premises within a thousand feet of me i'm sure there was a lot of Cova nineteen but that wasn't the predominant reason i'm not open the predominant reason i'm not open is because governor the governor of my state said you cannot be open well if that's the case and your state says that if the fiction proximate cause is covered then coverage has to be provided you've got a very colorable argument that an insurance company's denial of

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civil authority coverage is wrong so that's how that plays out I know it's getting into the weeds a little bit I think it's interesting it's important for policyholders to know this because again here you get it denial letter and it's just gonna say you're denied it's written in very technical language notwithstanding that they probably have the name of your business strong so it's good to know these things as you're reading it a lot of people have been asking about government intervention you know are we gonna get to a place where you know there's some sort of federal or state wide or leaf that will just fix

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all this business interruption coverage the answer is probably not there are a lot of states that have taken our legislators that have taken turns at writing legislation that essentially goes back and rewrites insurance policies none of those have made it to the governor's desk as far as I know and then I think probably there's major constitutional problems with essentially rewriting a contract by the government afterwards so I don't really expect that to have a lot of legs there's talk about

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a nationwide act where essentially the government would fund these claims and an insurance companies would administer it I don't have a lot of faith in the bipartisan abilities of Congress so I that's coming together I also think in general people aren't gonna like the idea of insurance companies didn't Iying claims and being provided money by the government to pay them and then taking a cut off of it as profit for administering them I just don't I don't see that happening and there is some

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talk about going forward having something that looks like a terrorism risk Insurance Act which basically is a government-funded insurance program where essentially they have to offer it to everyone and maybe that will happen but it's gonna happen prospectively not retroactively Lee so what should you and your business as a policyholder be doing now first step is make the claim there's no drawback it's making the claim on your

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policy the only people who are assured to get no coverage are those who don't make a claim and that's important for a whole bunch of reasons even if you don't plan on litigating your claim yourself you'll have kind of put your you know flag down and you'll be one of those people who if something goes your way you've already accomplished step one the other part of it too is that if you don't make a claim after enough time you also probably gonna run into some sort of statute of limitations or contractual

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limitation period most policies and everyone should know that say that you have to make your claim or sue on your insurance contract within one or two years of the direct physical loss so again definitely won't want to you know make sure that that happens document what you can you know again if simple Authority coverage is the best chance you've got we'll find out from your neighbors you know did any of you guys have an employee write a you know confirm Kovac case you know did you have

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a customer called you up later and said you did a confirm Kovac case to the extent that the court says well we need that type of evidence for this civil authority coverage to go through it would be good to have and this is the best time to get it when everyone's talking about it and may still be shut down on it isn't you know buried under all sorts of new memories and doing issues you want to document your damages that's not a big problem for businesses but it's important the truth of matter is you know the first hurdle is coverage and then if you get into a

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battle about how much money you're owed you're as far as I'm concerned 90% of the way there but have your damages ready you don't want that to turn into an issue after you fight that first initial battle and then wind up having a bunch of issues have your denial and policy review you are gonna get it denial and again it's not because of you it's not necessarily because you were uniquely different than anyone else but you know not everyone has a great claim so have that that denial reviewed know

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for people who are in Washington that's the type of thing that I can do very quickly nowadays I can just take a look at it and I and I already tell you with 90% accuracy you know whether or not you've got a pretty good policy for putting backward if you've got a tough one and then finally you know there are opportunities to band together or you know we've seen this happening in Washington so for example I already represent a bunch of restaurant clients they all have a very similar policy that doesn't mean that there's no expense to litigation but it also means that

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there's a lot of efficiencies these are the same policy forms largely the facts are largely the same you know we've got a similar legal research the same complaint can be used kind of as a template for everyone else and so there are efficiencies there you know if you think that you've got you know a bad denial you know talk to other people in your community talk to other businesses are situated like you I'm thinking about all going together and mass and that way reason you know seeing some real efficiencies as far as the costs of

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having to push back on a denial and last but not least this is kind of how I see the world this is important for how you might group yourself is that there's basically four groups of insurance there's the first group that has a pandemic endorsement no none of those should be taking this tonight on face value that's a very small group then there's a group that has no virus exclusion and that's again a good place to be if you're an insured then you've got the group that's got add-on coverages their policy form might be

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written a little funkier than sort of the typical commercial property form and those you know it's a mixed bag and the last group you just discuss what's called a standard commercial property insurance Services office for those folks are gonna have the hardest you know job fighting these denials and frankly you know may decide that it's not worth the expense in trouble of doing that but knowing where you fall into that talking quickly with the lawyer to get her consults on that it was good because

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again you were all businesses that pay premiums for years and years and years you turn to your insurance company and your time of need and you got denied when that happens I think it's worth you know at least doing a little investigation and make sure that denial is fair so that's what I've got right now if there's any questions I'd be happy to answer them great thank you so much Tristan I appreciate that as I listened to your presentation today and I realize a lot of these people will be filing claims what can they expect

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especially given that a lot of the businesses today are in dire straits what can they expect as far as turnaround time for a response or for relief we know most states say that they've got to complete their investigation into your claim within 30 days and that almost never happens but in this circumstance it sometimes does because a lot of insurance companies aren't even bothering investigate again they've got a template form you know they hear they find out other you're

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making a code 19 claim they insert your name sometimes accurately into the template and then they send you the canal so I've seen denials in as little as two weeks and I've seen denials that have taken as long as 60 days where insurance companies are actually doing a fig leaf investigation I think to try to diminish the chance that someone's gonna say well even if there was no coverage you know you did something in bad faith all the more reason to you know make sure that you're getting all of your

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ducks in a row as quickly as you can and not delaying I would say agree so Mike Mike asks does your business need to be completely shut down or how would you prove partial well I think the 'we know if you go into the civil authority context the easiest ways to show that the government in some way prohibited any level of access you know in washington they allowed to go orders in restaurants well they did say there's no dining services that is a prohibition

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of access so if if you know customers just left because they were scared that's tough but if there's anything where you know a Health Authority a governmental authority a regional edict anything that regulated your business that to me can be construed as you know having a suspension of your operations due to direct physical loss okay we have another question in here Tristan and it's a little bit like the first one

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that I asked so when's the best time to file a claim no there's no doing it might as well get it in their file your claim it doesn't you know I think people are worried if I file a claim well my insurance company not renew me very unlikely in this circumstance there's tens of thousands of claims are being filed nobody's saying oh those bad people who filed the claims we're never gonna insure them again and they're all being denied anyways and on top of that I think you see the changes in the

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insurance market are not going to be driven relative to specific businesses making claims this is a global event and so those types of major structural changes that you might feel are happening on a much much higher level than you going to your broker and saying file a claim for me great thank you so our next question with the most up votes here is is it fair or appropriate to start the reopening process if I'm

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filing a claim for losses yes absolutely in fact you're required to you know you've got to mitigate your damages staying closed will voluntarily will not help your business interruption claim again I think you're gonna want to show that you had in the insuring language says you need a necessary suspension of operations well for a lot of people we've had that necessary suspension because the government told us you have to suspend your operations once that those facts

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aren't there anymore those claims get much much more difficult great thank you so we have another question with up votes what if the business policy has exclusion on viruses and due to that due to that received the denial letter what are the options in this situation also also which group would this fit in so good question I don't know which group you'd fit in until I looked at your policy but let's say you're in group 4

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which is that you just got a standard commercial property policy that's based on an insurance services offices form those are tough claims to be especially if you're in a less you know policyholder friendly state there's a couple things to think about there one you know look at my endorsements do I have any add-ons to my policy that you know exists outside of that virus exclusion and then second what does my civil authority coverage say because there is this chance of doing the end

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around you know the fish' proximate cause of my loss was a proclamation and there's not some other exclusion that removes proclamations as covered causes of loss well then the fact that there's a virus somewhere in there and this chain of causation may not matter that certainly may not be true in every other state the thing to think about and you know potentially have evaluated quickly it sounds like I have a call coming in sorry about that if you can hear everything Andrew so I have one more

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question here what language should I ask to be included in future policies to better the chance of getting a claim approved if or when another crisis like this one happens again a really good question I'll I'll put it look into my magic 8-ball and this is what I tell you is that the insurance industry as a whole it's gonna go back and try to write the most impossible to get around by exclusion imaginable and they're gonna

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stick it into every single policy and they still might not work I mean they try to do this with all sorts of things and create a policy learners around it that's what's that's what the future is gonna look like there's any no ability I don't think for a typical policy in order to avoid that what you may still see happen though is for an add-on you could buy some kind of limited pandemic risk endorsement like the one I put up on the screen I think those will be sold I think they'll be expensive but I think

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that you know anytime you see something like this happens there's gonna be some insurance company that says well let's see if I can offer this since it's on everyone's mind so I think you'll see those endorsements but I think you won't see any policies without a buyer's exclusion great thank you I have two more do you mind I know we're right at time but I have two more that I'll roll into one again it seems to be on a timeline or time line questions so we're asking are they're asking if your insurance denies

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your claim how soon will you need to file suit and if you're denied in your initial claim what is the timeline if you appeal so good question almost every single commercial property policy says that you have to file suit to preserve your right to bring a breach of contract lawsuit within one or two years of the direct physical loss or damaged I've been you know for a rough you know when did that happen I've been

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using the date that Washington recover Inslee shut down you know whichever of my clients industries it was so for restaurants March 19th for construction I think it was March 25th but whenever you need to file suit within that date or else you cannot bring many instances a breach of contract action against your insurance company and again almost always that's one or two years from the date of the direct physical loss or damage and one

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final question from Charles does the order of civil authority coverage have a time limitation in it ie three to four weeks or is open-ended it does it's usually got is a time element coverage most often it's four weeks and then it's capped out too so it'll be four weeks and $500,000 or four weeks and $250,000 it's also got a geographical range so some people have still Authority with then you know that

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could have happened within 10 miles of other restaurants for some people it's the thousand feet so each one of these is a little bit different it's very easy to figure out you know usually that informations and the declarations of your policy well that's a very good question because it is time it is time capped great thank you Tristan I think what we've learned is that all policies are a little bit different it is always good to be able to rely on the experts if you have questions and to be able to act quickly during this pandemic so

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Tristan we've come up to our time today thank you so much for being able to really be in lockstep in side by side with these small businesses all across the country for Better Business Bureau Northwest and Pacific we're so grateful for you just as a reminder I wanted to let everyone know that this is being recorded and it will be available on youtube.com slash BBB nwp later on this afternoon if you want to be able to check some of the information or pass it

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on to your colleagues in addition we also have a website that continually has updates including links to these webcasts links to upcoming webcasts which we will be airing of times a week going forward and that website is trust - bbb.org / Co vyd trust / or trust - bbb.org / co vyd hope you join us on Tuesday next Tuesday May 26th and we

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have Darrin Leon coming back with us 2 p.m. mountain time to talk a little bit about finances and the changes for the loan application process that have been occurring for PPP and the idle loans thanks everyone we appreciate Tristan again thank you so much we'll see

Insurance Coverage for COVID 19 Losses the Policyholders’ Perspective

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SENIOR PRESCRIPTION COVERAGE

DENTAL COVERAGE

SENIOR VISION COVERAGE