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Risk Management Alert: Businesses Affected by the Coronavirus Pandemic

By: Michael J. Faul, Jr., Esq. and Cara Ann Murphy, Esq.

The coronavirus pandemic has disrupted the daily lives of many, including businesses’ workforces, supply chains, and transportation needs. As the COVID-19 pandemic continues to spread across New Jersey and the United States, business owners, either small or large, should assess their risks and determine what protections and coverages are available to them under their current insurance policies and contracts for the losses that have been or will be sustained.

Under certain commercial property insurance policies, coverage may exist for general property damage as well as economic loss suffered as a result of both State and Federal Government-mandated closures, restrictions on travel, social distancing policies, reduced workforces, and restrictions on access by customers. Some commercial property insurance policies may have business interruption insurance which is intended to protect businesses against losses sustained as a result of property damage or disruptions in the course of business such as mandated closures or limited operations as a result of the outbreak. Moreover, some policies may even have event cancellation terms which can provide coverage for expenses and lost revenue.

It is essential that business owners impacted by the coronavirus pandemic secure and review their insurance policies carefully to understand available coverage. It is also important that business owners track any mediation efforts taken to limit their losses and to document any property damage to ensure that maximum relief is provided by their insurance company.

In addition to reviewing their insurance policies, business owners should also:

1. Track legislation, such as bills passed by both the State and Federal Governments, on issues such as small business relief and mortgage payment forbearance;

2. Contact their landlord if leasing to see if they would be agreeable to suspend or reduce rent as some commercial lease agreements permit such in a situations like this;

3. Keep up-to-date of any stimulus bills which are intended to benefit small businesses;

4. Review any contracts with vendors or clients to see if there is any flexibility in performance due to the pandemic;

5. Stay informed of any actions taken by professional associations to provide guidance on handling the outbreak and possible assistance to its members; and

6. Examine the scope of the applicable insurance policies to see if there are any exclusions as a company’s response to the growing coronavirus risk may become the subject of future litigation.

Herold Law, P.A., can assist business owners in reviewing their insurance policies to ensure that the maximum benefits are available to them and pursue claims against insurance carriers and brokers as appropriate. The attorneys at Herold Law, P.A., can be contacted at (908) 647-1022.