Business Interruption Caused by COVID-19 and Appraisal Issues
Federal Appraisal will continue to serve our Clients during the COVID-19 crisis. COVID-19 may cause business interruptions, damages, and lost income. Federal Appraisal provides appraisals of real property, businesses and business intangibles, and personal property, for business interruptions, damages, and lost income. Additionally, our business interruption advisory services include consultation, negotiations, litigation, and testimony.
COVID-19 continues to cause unprecedented disruption in businesses globally. In the realm of the crisis, several businesses have filed insurance claims related to business interruption; however, there has been great disagreement between insurance companies and businesses on both the validity and eligibility of business interruption claims caused by COVID-19. Those attempting to make claims argue that viruses and/or viral pandemics are not explicitly excluded from business interruption coverage; yet their claims have been rejected by insurers without substantial investigation. Ongoing disputes have led to federal lawsuits that have been filed against several insurers who have denied business interruption claims as a result of COVID-19.
Certain spokespeople from prestigious insurance companies have defended the industry by claiming that viral outbreaks and pandemics are uninsured and uninsurable within their current offerings. Further arguments include the notion that the novel COVID-19 virus does not result in physical or property damage. Additionally, due to both national and state regulations, businesses are not eligible to trigger civil disturbance clauses because businesses as a whole and not specific businesses, are being mandated to temporarily close. Defendants of businesses argue on the contrary that the reason they pay for business interruption coverage is because their business is sensitive to interruptions. Certain lawyers also argue that physical damage is still occurred though the microscopic particles resulting from the virus. Nearly 300 federal lawsuits were filed against insurance companies between March and April of 2020 pertaining to Covid-19 disputes. Lawyers anticipate 100’s if not 1000’s of more COVID-19 related claims to proceed in the coming months. Future litigation is expected to gyrate around wrongful death, injuries, workplace discrimination, insurance, employer liability, safety, and privacy concerns. Certain prosecutors also expect traditional complaints to be looped in conjunction to COVID-19 disputes that may exacerbate whistleblowing.
Currently, certain policies such as the Pandemic Risk Insurance Act are being drafted that may require insurers to cover up to a stated number of losses with limits backed by the federal government. Opposing parties raise the concern that the federal government’s intervention in private contracts between independent parties may be unconstitutional. Furthermore, if such pandemic payouts were to be issued by insurance companies, current and future policyholders may witness increased insurance costs.