A Missouri court is opening the door to business interruption claims
Early discussions about business interruption coverage for COVID-19 losses were discouraging. We reported in March that most property and casualty policies don’t include coverage for loss of income based on diseases or viruses. Indeed, several state courts have upheld insurers’ virus exclusions.
But a court in Missouri appears to be expanding the definition of loss in a few cases. According to an August Legal Alert from our friends at Lathrop GPM, a Missouri federal court recently ruled that specific plaintiffs may pursue claims for business income losses due to COVID-19 under standard property and casualty policies.
Discuss your loss with your broker
In light of this change, you’d be wise to talk with your broker, who can help you decide whether to make a formal claim.
Consider reporting any loss of revenue resulting from COVID-19 changes, such as:
- Losses caused by a shutdown or significant change in your business model
- Increased expenses due to requirements for PPE and other equipment and supplies
- Increased costs because of manufacturers’ price increases
- Contingent income losses based on a supplier’s inability to deliver components of your product
- Sales decreases resulting from lack of access to customer worksites
Rest assured that this first step is quick and easy; little documentation is required on the front end. After you talk to your broker, a claim advocate will work with you to determine whether coverage is likely. Then they will help you develop documents to support your claim.
Review your current limits
As we said last spring, this situation is a good reminder to review your business income insurance limits. We often find that clients are under-insured, because their business has grown, and they haven’t increased their limits accordingly. We recommend looking at them annually.
Update September 16, 2020: While the Missouri court is allowing two cases to move forward, most other courts around the country are siding with insurers. Time will tell which side will be victorious.