Business interruption insurance often is part of the protection provided by business property policies. Compensation is designed to cover the loss of business-related income. Payouts on policies are usually triggered by floods, fires, earthquakes, wind damage from a tornado, or any natural disaster. A “civil authority” clause may be in effect if a government agency denies access to a business due to a disaster.
Some policies specifically exclude coverage for business interruption lost income from a virus as a result of the SARS virus of 2002 and 2003. Others do not. The wording of policies can be quite varied from carrier to carrier and from contract to contract. The exact language in a given policy is a critical factor in coverage.
Some state legislatures are considering retroactively enacting legislation compelling insurance companies to cover policies, even with the stipulated virus exclusion. Others are opposed. President Donald Trump weighed in on the matter during his April 10 coronavirus press briefing.
“You have people that have never asked for business interruption insurance, and they’ve been paying a lot of money for a lot of years for the privilege of having it,” Trump said at the briefing. “And then when they finally need it, the insurance company says, ‘We’re not going to give it.’ We can’t let that happen.”
A coalition of major insurance industry leaders and lobbyists wrote a letter to influential members of Congress on April 2.
“Insurance coverage works by spreading risk, but that model simply cannot account for a situation in which losses are catastrophic and nearly universal. Standard business interruption policies do not, and were not designed to, provide coverage against communicable diseases such as COVID-19, and as such, were not actuarially priced to do so,” the letter said.
Dental Industry
Government-mandated shutdowns of dental clinics related to the COVID-19 crisis have devastated the dental industry. This certainly includes dental practices, but also extends to dental laboratories, dental manufacturers, and supply chain distributors. The full negative impact has yet to be determined. Owners of dental practices, large and small, are asking if they have a valid policy claim for business interruption lost income.
Patrick J. Stueve, an attorney with Stueve Siegel Hansen LLP in Kansas City, Missouri, reports a discouraging reality.
“Regardless of the policy language, the insurance companies have been denying coverage,” He said. “We have reviewed hundreds of dentists’ property and casualty insurance or BOPs (business owners packets) or some other form of packaged business owner insurance. All of them have provisions that expressly cover business interruption losses.”
Patrick Luff of the Ammons Law Firm LLP in Houston, Texas, advises dentists to note their policy’s terminology.
“Most commercial property insurance policies include coverage for business interruption losses. This coverage may be called ‘time element,’ ‘business income,’ or ‘gross earnings’ coverage depending on the particular policy,” Luff said.
Owner-doctors are currently experiencing very tight cashflow from lost production, with increasing overhead expenses from personal protective equipment (PPE) and social distancing at their facilities.
“Our firm is offering to review doctors’ policies free of charge and is representing doctors on a contingency basis, meaning any payment we receive only comes out of successful recoveries we are able to obtain. We believe this just makes good business sense for doctors in a time when cashflow may be limited,” Luff said.
“Our firm will review the policy at no cost to the dentist and pursue their business coverage claim on a contingent basis with no cost to the dentist. We can also assist in the processing of their claim with the insurance company,” Steuve added.
Some dentists may ask if they need to seek legal counsel specifically licensed in their state to pursue a claim for business interruption insurance. That is clearly not the case, Luff and Steuve explained, as their law firms are nationwide law practices.
“Our firm and those we are working with have represented clients nationwide for decades. The cases we are bringing will need to be filed in various jurisdictions around the country,” Steuve said.
Just as there exist specialty practices in medicine and dentistry, specialty practice exists in law.
“Business interruption insurance coverage is a niche practice. You will want to find representation by a firm with special knowledge and experience in this area. The Ammons Law Firm filed one of the first lawsuits and one of the first class actions in the country relating to these issues,” Luff said.
“Insurance coverage issues are complex. Our firm has decades of experience litigating policy language issues against insurance companies. We have consulting experts who specialize in insurance coverage issues. Because these policies are complex, these types of claims require counsel that have experience litigating complex insurance policy issues,” Steuve said.
Conclusion
Doctors are not strangers to how the insurance industry often will go to great lengths to deny coverage on a valid claim. Apparently, there is an industry-wide standard in play to universally deny coverage on business interruption policies related to COVID-19 closures.
Some of these policies will allow coverage, while others will not. Determination is best made by an attorney expert in this niche field.
Your retained lawyer has a legal and ethical responsibility to act in your best interest. The insurance “agent” who sold the policy may hold little to no fiduciary duty to the policy purchaser. The agents’ allegiance and fiduciary obligation is generally toward their employer operating in a fancy high-rise building downtown, not you.
An agent’s declaration that you are not covered under terms of your policy for any given event may or may not be binding. You may decline to accept that at face value. It is best to check with your attorney, one with expertise in this field of law.
Dr. Davis practices general dentistry in Santa Fe, NM. He assists as an expert witness in dental fraud and malpractice legal cases. He currently chairs the Santa Fe District Dental Society Peer-Review Committee and serves as a state dental association member to its house of delegates. He extensively writes and lectures on related matters. He may be reached at mwdavisdds@comcast.net or smilesofsantafe.com.
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