July 24, 2020 by Adam Malik
Hub International is advising clients to submit claims related to the COVID-19 pandemic, even if there isn’t a physical damage loss.
Business interruption has been the most-inquired-about coverage area over the last few months, noted Scott Fouts, vice president of risk service at Hub International. And although most general commercial policies contain BI exclusions for pandemic, each policy is different, and there may be something in a particular policy that allows a business interruption claim to go through.
“Sometimes defining what business interruption is — what the triggers are, what the thresholds are to provide that support and that coverage from a carrier standpoint — has been a tough discussion for…everyone,” he said during a webinar panel hosted by the brokerage giant entitled, The Next COVID Crisis: Claims, Lawsuits and Lessons We Can Learn Now.
David Chmiel, senior vice president and national director of claims at Hub International, agreed. “From Day 1, the Number 1 affected line of coverage in the property and casualty world has been business interruption,” he said on the webinar. “So many businesses were forced to shut down [by] government mandate or alter how they do business.”
He understands why businesses are eager to inquire about filing claims. “If you’re a full-time business with 150 guests every lunch hour, you were [suddenly] doing curbside pickup or shutting down completely,” Chmiel said. “Several small businesses that spent their whole lives to get to this point were forced to shut down.”
There is, as Fouts mentioned, the challenge of triggering a BI claim. That would normally happen following a physical loss or damage.
“Technically, COVID is not viewed as a ‘physical loss,’ as a hurricane or tornado [is],” Chmiel explained. The majority of commercial policies have “that little virus exclusion as well,” he added.
But Hub still advises clients to file claims anyways. “First and foremost, we encourage everyone to report it from the beginning and let the coverage play out,” Chmiel said.
Every case is different, as Chmiel points out, explaining the rationale. Some clients may have purchased endorsements, for example. “Every policy had to be looked at from top to bottom. So we filed claims.”
He also commended insurance companies for taking extra time to review claims.
“It wasn’t an initial two weeks [and then], ‘Here’s our blank denial. We know it’s not covered because of the virus exclusion or a lack of some type of physical loss,’” Chmiel said. “[Insurers are] taking their time. Of the thousands [of claims] that have been reported, less than 50% have been given an acceptance for denial. Why? They’re taking their time and giving you, as a policyholder, the ability to gather all that intel so they can make a proper decision.”
And so when it comes time to file a claim, “I can’t emphasize enough the amount of information that you need to gather,” said Chmiel.
Included in the information that a client may need to gather would be a loss of income statement — comparing financials to the same time period of last year — and any costs associated with getting the business ready to re-open, like bringing in a restoration company to clean the area.
“All those expenses potentially could be covered,” he said.
Feature image by iStock.com/designer491