Ideas Before the Deluge: Courts Weigh COVID-19 Insurance Coverage Disputes Matthew D. Fender, a litigator who focuses his practice on representing policyholders in insurance recovery disputes, discusses an array of COVID-19 issues and claims, including a recent federal case in which the court concluded that the coverage trigger “physical loss or damage” is satisfied by the presence of novel coronavirus on surfaces.
CCBJ: What is your first piece of advice to a business facing losses that might implicate different types of insurance coverage? How should they assess their existing coverage? First and foremost, and this is hardly novel advice, you must put your insurance carriers on notice. Failure to do so can forfeit coverage in many states. Giving notice is simple and easy to do. Just write them a letter citing all potentially applicable policies and tell them the general subject matter of the claim or potential claim. I don’t like to go into a lot of
detail about the policy or the coverage in the notice letter. That way the insurer will take the opening position on coverage, and you can respond. I never like to go first in that kind of exchange. What is the difference between business interruption and contingent business interruption? Business interruption coverage provides replacement income and expenses when there is damage to your insured property. Contingent business interruption coverage provides the same kind of protection when there is damage to the property of another company in your supply chain, either a customer or supplier. Policy language varies as to how far up and down the supply chain, but that is the basic idea. Many policies require that losses flow from “physical damage” or “direct physical damage.” How do the courts construe this when it comes to claims arising from COVID-19 and the government response to the pandemic. CORPORATE COUNSEL BUSINESS JOURNAL
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