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Businesses need to carefully review every element of their property and business interruption insurance policies to determine whether they will respond to losses due to temporary shutdowns during the COVID-19 pandemic, Marsh LLC experts said Wednesday.
As state, local and federal governments issue different orders and mandates, whether a commercial property policy responds will depend on the specific language of the policy and the facts of the individual claim, said Robert O’Brien, managing director, property claims, at Marsh LLC during a webcast.
“A big factor is going to be whether insurers consider that the presence of COVID-19 on property constitutes physical loss or damage as covered by the policy,” Mr. O’Brien said.
“Even if the physical loss or damage trigger is established, insurers could try to invoke contamination or various exclusions to the policy. That’s why it’s extremely important to do a deep dive analysis of the entire policy,” he said.
Businesses should thoroughly review the terms and conditions outlined in their policy, he said.
“We need to look at all of the exclusions that insurers might raise to find out how those might be relevant to any coverage arguments we are making,” Mr. O’Brien said.
“What are the specific coverage extensions and provisions of each extension. Are waiting periods involved? Are there sub-limits or distance limitations?” he said.
Insurers’ definitions may differ from one policy to the next, so it’s important to review every endorsement, he said.
“You may have multiple insurers on your program, and they may have different endorsements for slightly different definitions because each insurer may issue a company-specific endorsement with those definitions,” Mr. O’Brien said.
In addition to the coverage under the policy, claims need to be supported with the appropriate documentation, he said.
“It’s important to gather the facts on every factor interrupting or impeding your business operations whether it be a government order or the need to clean facilities,” he said.
Businesses should keep hard copies of every piece of documentation. “Often links giving government orders or regulations can expire. When you need them down the road they may not be accessible. Download and keep hard copies of all pieces of information,” he said.
Businesses also need to be aware of the time-sensitive provisions in a policy and file their claims in a timely fashion, he said.
More insurance and risk management news on the coronavirus crisis here.