The Physical Loss Requirement of COVID-19 Business Interruption Claims
As long as a virus exclusion is not included in a company’s business interruption policy, most disputes arising from COVID-19-related claims will depend on whether a claimant can prove that the closure of a business property (due to contamination or threatened contamination), qualifies as physical loss or damage. This could prove to be an extremely complex undertaking, so if your business has suffered losses as a result of the COVID-19 pandemic and you have questions about the types of evidence that you might need to support your claim, please reach out to our Wilkes Barre business interruption insurance (COVID-19) lawyers today.
Loss of Use as Physical Loss or Damage
Typical business interruption policies compensate businesses for any income they lose because they are forced to suspend operations as a result of a physical loss or damage to the insured property. When it comes to Business Interruption Insurance (BII) and COVID-19, the threshold question of coverage will most likely revolve around whether the closure of a company’s doors (due to contamination or threatened contamination by the coronavirus) constitutes a physical loss or damage under state law.
Prior Case Law
There is little prior Pennsylvania case law that addresses the issue of whether contamination qualifies as physical loss for Business Interruption Insurance purposes, but some courts have addressed the issue. In 1992, for instance, one Pennsylvania court held that an oil spill that polluted the groundwater in the vicinity of an insured building constituted a physical loss because it rendered the structure uninhabitable. In 2005, the Third Circuit Court of Appeals, in applying Pennsylvania law, utilized the same reasoning, holding that the bacterial contamination of a claimant’s water supply qualified as direct physical loss to property (despite the lack of physical damage), as it rendered the residence uninhabitable for the homeowners.
While these rulings could be used to support a COVID-19 business interruption claim, their application to the issues currently facing business owners across the state remains to be seen.
Filing a Business Interruption Insurance Claim
Many Pennsylvania businesses have begun filing Business Interruption Insurance claims after the COVID-19 pandemic forced them to close their doors. While Pennsylvania courts have not yet issued any firm guidance on COVID-19 claims, there are still steps that business owners can take to prepare for the submission and possible denial of their own claims. To learn more about filing a business interruption claim or appealing an insurer’s denial, please reach out to our office today.
Call Today for Help with Your Business Interruption Insurance Claim
Please call our office today to learn more about Pennsylvania’s BII laws and how they could apply in your own case from a business interruption insurance lawyer (COVID-19). A member of our Wilkes Barre legal team can be reached at Figured Law Firm by calling 570-954-9299 or by completing one of our brief online contact forms. We are standing by and eager to help you with your questions and concerns.