Many businesses protect themselves with business interruption insurance. This insurance typically pays the business owner for loss of revenue/income that would have been made if there were no business closure. Claims of Covid business interruption through the use of Mediation are called for so there can be a speedand fair resolution that works for everyone.
The purpose of business interruption insurance is to "do for the insured in the event of business interruption...just what the business itself would have done if no interruption had occurred.(1) Although a simple statement, in actuality disputes over whether there was actual business insurance coverage for the instant stoppage and the amount of loss are often litigated.
The policy language is critical. Of course, the insurance policy must be read against the back drop of statutes and case law.
An Example of Business Interruption Policy Language
This is an example of actual business interruption policy language in an insurance contract:
Subject to all its provisions, this policy insures against loss resulting directliy from necessary interruption of business caused by damage to real or personal property, except finished stock...
Recovery in the event of loss hereunder shall not exceed the ACTUAL LOSS SUSTAINNED by the insured resulting directly from such interruption of business, for only such length of time as would be required with the exercise od due diligence and dispath to rebuild, repair, or replace such described proprerty as has been damaged.(2)
General Elements of Business Interruption Claim
Generally, the elements of a business interruption claim require:
1. physical damage
2. to the insured property
3. caused by the covered peril
4.resulting in quantifiable business loss
5. during the period of time it takes to restore the damaged property.
An Insurance Defense to Covid 19 to Business Interruption
We all know the Covid Virus caused the closings of many businesses. This is undeniable. However, an insurance company may argue there is a threshhold bar to overcome. Thus, unless there was actual contamination of the premises, no direct damage to the business might be argued, and the insurance company may refuse to pay. This can be open to interpretation, as the mere presence of the virus in the business location may or may not be interpreted to be the damage necessary.
Excusions as a Defense to Covid-19
Some policies exclude coverage for viruses, contamination and pollution. There may be legal arguements that preclude or avoid these exclusions.
However, read your policy carefully as some policies do not require direct physical damage especially when a civil order restricts access to the business.
Some states, including Ohio,are trying to retroactively legislate coverage. This can be rife with lengthy legal issues. It may or may not lead anywhere.
Why Mediation for Covid -19 Business Interruption
Lawsuits in some cases have already been filed. Class actions, seemingly the favorite of attorneys, as in many cases they get the lion's shrae of the class action money are also being filed.
It would seem for the good of all concerned and for the good of the country, that these claims should be resolved sooner than several years from now.This may be the difference from the business surviving or dying. One way to do this is Mediation. (3) Mediation is where the parties together hire a mediator to assist them in resolving the issues. Not least among issues, is the amount of the loss. This can be a factual intensive process read against the backdrop of the policy language.
A mediator can direct the process premediation so the parties have the information they feel necessary to make a decision. Then when the mediation day comes the parties can go through all the issues and see if they can collaborate, with the help of a mediator, to find a solution that is satisfactory to all.
The benefits are the time frame can be shortened from 2-3 years to 2-3 months in many cases. Moreover, the money saved and the time saved by avoiding litigation can be substantial.
1. Firemen's Fund v Peterson, 63 Ohio App.3d 319 (1989)
2. Rubbermaid v. Hartford Steam Boilers, 96 Ohio App.3d 406 (1994)
"Mediation is a dynamic structured, interactive process where an impartial third party assists the disputants in resolving conflict through the use of speicalized communication and negotiation techniques. The mediator uses a wide variety of techniques to guide the process in a constructive direction to help the parties find their optimal solution."
About The Author
Anthony has extensive experience and training as a mediatior. Anthony is the Chairperson for the Cincinnati Bar Association Dispute Resolution Committee. He trained at Harvard's Executive Program on Mediation and is on the mediation panels of:
Hamilton County, Ohio Court of Common Pleas
Butler County, Ohio Court of Common Pleas
Warrem County, Ohio Court of Common Pleas
Federal District Court Souther District of Ohio
Anthony is available for private confidential mediation and for pre and post lawsuit mediation. He is happy to discuss with businesses and/or insurance companies whether Mediation is a viable alternative. He is also certified by Resolute as an online mediator.