Real Estate & Construction Blog

Insurance

Was Your Business’s Property Damaged during the Civil Unrest? Ten Things You Can Do if Your Property Has Been Damaged.

Notify Your Insurer. Typically, property insurance policies require notice of a claim as soon as practicable. Notice requires a description of when, where and what happened to result in a claim. If you have a loss, put your insurer on notice immediately. File a Police Report. Make sure to file a police report. Many policies require a police report if the damage results from unlawful activity. This can be a challenge, as it is now, because the police and fire departments are inundated investigating fires and incidents of property damage. Make every effort to report the damage and memorialize your efforts. Obtain a police report or, at a minimum, an investigation number for your insurer. Assemble Evidence of Damage. If there are photos, surveillance or any other proof of damage, the material should be secured and provided to the insurance carrier when appropriate. Protect Your Damaged Property if Possible. Most insurance policies require a policyholder to take reasonable steps to minimize damage. Board up and secure the property if it is feasible and safe to do so. However, the obligation to mitigate damages is tempered by reasonableness. There is no obligation for a policyholder to put itself or its employees in harm’s way. Collect Evidence of Lost or Damaged Personal Property. Secure evidence of inventory and personal property lost. Make a list and assemble records of purchase price, inventory, renovations, etc. Begin gathering evidence substantiating personal property damage immediately. Secure Financial Records. Your policy may include coverage for damages resulting from a business interruption. Gather historical financial records of sales, expenses and income for as many prior years as is reasonably possible. Pay attention to the months leading up to the event. The challenge of proving business interruption claims is meeting the burden of proof for lost income. Assembling historical financial information is invaluable. Identify Potential Witnesses. Make a list of the individuals who can corroborate personal property damage, inventory, property value or other losses. Assemble this list as soon as possible as it is easy to lose contact with important witnesses after a business suffers a significant loss. Write Down Important Information. Write down everything you remember about the incident and create a loss journal. Memorialize names, communications with your insurer, persons who may have important information, involved authorities, and other important dates, times or discussions. Memories fade quickly. Write down everything that could be important before the information is lost. Find Reputable Contractors to Perform Repairs. If your property suffered damage, start looking for qualified construction experts who can help assess damage and propose necessary repairs. Insurance policies often limit the recovery of damages to the “period of restoration.” That is the theoretical period of time during which repairs should reasonably be completed and your business up and running again. It is important to get your business functioning fully in the shortest reasonable time. Promptly Respond to Reasonable Requests for Information. Your insurer may request that you produce employees for interviews and provide photographs, historical information and inspection reports. . Respond to reasonable requests in a timely manner. If the insurer’s requests become intrusive or unreasonable you may want to consider hiring counsel to protect your rights. Ultimately, the insurer will ask that you provide a Sworn Proof of Loss attesting to the amount of damages. Preparation, thoroughness and diligence substantiating the extent of loss will reduce disputes with your insurer and maximize the speed with which your claims will be processed. The first step is always to understand the coverages afforded by your insurance policy. If you understand your insurance coverage, memorializing your claim is exponentially easier. As always, Larkin Hoffman is available to help policyholders on their insurance claims.

June 5, 2020

Insurance

Why Covid-19 Losses May Well Be Covered under Your Business Interruption Insurance Policies

COVID-19 and the stay at home mandates have had a devastating impact on the business community. Many business owners are looking to their business interruption and other insurance to cover the losses but finding insurers are asserting various coverage issues and exclusions. Paul Smith and Chris Yetka shine a light on what to look for in your policies before you give up on financial help from insurers. This episode of Larkin Hoffman Briefings will discuss the various strategies all businesses should employ when assessing their insurance coverage. About the Larkin Hoffman Podcast Briefings The Larkin Hoffman Podcast Briefings series was developed to discuss issues affected by the COVID-19 crisis. Our attorneys address corporate, employment, real estate, construction, franchise, bankruptcy, insurance, litigation, and other matters in this series. Over the next few weeks, there will be several podcasts on developing matters. Larkin Hoffman is available to help. Please reach out for additional guidance.

May 26, 2020

Construction

Insurance and COVID-19: Are We Covered?

For a period of time now businesses have seen the effects of COVID-19 on supply lines and suppliers. But now that the virus has been officially labeled a pandemic, and businesses are being asked to shut their doors to effectuate social distancing, will insurance be the last bulwark against financial harm? The answer, as always, depends. There are generally two types of claims that businesses will deal with. One is third-party claims brought by others seeking recovery due to some perceived shortcoming on the part of the business. The other is first-party losses suffered directly by the company. How can COVID-19 play into these two concerns and what are the implications for insurance? Most businesses will carry Commercial General Liability (CGL) insurance to deal with third-party claims. But what are the issues relating to disease? If a business simply fails to fulfill contracts, an argument for coverage may be difficult. Most policies contain “business risk” exclusions that expressly exclude coverage for breach of contract damages. However, if a business is sued because it allegedly failed to protect against transmission of disease, or caused another company to have to shut down its offices, there is a strong argument that coverage would be provided under the Standard CGL policy. The normal language of the policy provides coverage for “sums the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’”. “Bodily injury” is usually defined to include “sickness or disease”, and “property damage” usually includes ‘loss of use of tangible property that is not physically injured.” There are exclusions that insurers could point to, like the pollution exclusion, and some policies have specific exclusions for infectious disease. A close review of your policy is important. The bigger risk is likely the first-party loss caused by businesses being shut down entirely, or significantly curtailed. This is just the type of loss that business interruption policies were created to address. The problem is that unlike CGL policies that are pretty uniform, there is a significant amount of variance in the language of business interruption policies. Generally, these policies are meant to cover the loss of business income along with extra expenses that are occasioned by a covered cause of loss. What causes trigger coverage can vary from insurance form to insurance form. However, nearly all policy forms require some form of damage, which is often undefined. The Oxford English Dictionary defines ‘damage’ as ‘Harm or injury impairing the value and usefulness of something or the health or normal function of a person’. Additionally, the Insurance Services Office “Business Income” form (CP 00 30 04 02) provides additional coverage for losses “caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than the described premises, caused by or resulting from any Covered Cause of Loss.” The coverage requires damage to property and a covered cause of loss, which will depend on the language of your policy, but clearly there are strong arguments for coverage. The process of policy interpretation has already started. The Oceana Grill restaurant in the French Quarter of New Orleans commenced, what is believed to be, the first case seeking a declaration of coverage for COVID-19 caused losses under a business interruption policy. Cajun Conti, LLC, et al. v. Certain Underwriters at Lloyd’s London, et al.,Civil District Court for the Parish of Orleans, Louisiana. The restaurant’s policy covered “direct physical loss unless the loss is specifically excluded or limited.” It also included an extension of coverage “in the event of the businesses (sic) closure by order of Civil Authority.” The Oceana Grill’s Complaint argues that the virus causes direct physical loss to the affected premises in that the virus infects and stays on the surface of objects for an extended period of time and that contamination of the premises constitutes direct physical loss requiring remediation. Taking the argument one step further, they asserted that if the restaurant is shut down because of the presence of the COVID-19 virus in other restaurants, then they are entitled to coverage for losses under the Civil Authority coverage extension. It is important to note that the Oceana Grill’s policy did not contain a “virus” exclusion. The most important point is that the policies and circumstances differ. Making an informed decision regarding the availability of coverage requires an analysis of both. Given the breadth of the current pandemic, the best time for a review and assessment of possible insurance is now so you can make a timely claim if and when losses arise.

March 18, 2020

Search

Paul R. Smith

Was Your Business’s Property Damaged during the Civil Unrest? Ten Things You Can Do if Your Property Has Been Damaged.

Why Covid-19 Losses May Well Be Covered under Your Business Interruption Insurance Policies

Insurance and COVID-19: Are We Covered?

Firm Highlights