ANSWER:

Unfortunately for the insured, we have to agree with the carrier on this denial. The business income coverage would only apply if there was direct physical damage to the covered property. You do not say what caused the elevator to go down but it does not appear that it was from a covered cause of loss. If it were damaged from a covered cause of loss, and the policy also had extra expense coverage, then the need to hire additional staff would be a covered extra expense to keep the business up and running.

Without the elevator being damaged from a covered cause of loss, the carrier is correct in applying the exclusions for consequential loss, delay and loss of market.

QUESTION: 

The COVID-19 pandemic is challenging the Insurance Industry in areas of coverage interpretation that were not a component of the Underwriting and Rating process.

Under a Residential Homeowner HO3 policy, how are the following scenarios responded to:

1.The home sustained a covered loss, prior to the COVID-19 pandemic outbreak, making the house uninhabitable and triggering ALE coverage for the Insured(s). Because of limitations in place, directly and indirectly related to the various Executive Stay-At-Home orders, contractor repair activity is taking longer than normal. This involves suspensions of service, and an extended repair time. Does the Additional Living Expense coverage under the policy respond to this delay, which increases the ALE cost of the claim?

2.The home sustains a covered loss, but the house remains inhabitable. The Insured(s) is seeking ALE coverage while the repairs are being made. Out of the fear of coming into contact with a potentially infected construction worker, even though the workers are taking the necessary precautions in compliance with CDC guidelines and social distancing, e.g.wearing masks, gloves and even protective clothing. Does the policy ALE respond?

3.The home sustained damage from a covered loss and became uninhabitable. The Insured(s) were placed in temporary housing and ALE coverage was provided. The repair to the house is now completed but the Insured(s) do not want to return to the house, since it is located in a 'hot-spot'. Does the policy ALE respond?

ANSWER: 

1. Yes, ALE should cover the extended time to repair the property since neither the homeowner nor the contractor have any control over state orders, and what businesses are or aren't essential. Even if the repair work falls under an essential business, supplies may be unavailable, workers may be sick, or there could be other issues. Some insurance departments have expressly stated that in such situations ALE should be provided. https://www.nuco.com/fcs/2020/04/06/pandemic-recap-and-updates/ 

2. While I understand the insured's fear, if the contractors are adhering to all CDC recommendations, and the insured's can safely remain in different parts of the house from where the work is taking place, I don't see that it would be covered. However this is an unusual circumstance, and a carrier might be making an exception for such circumstances. I haven't seen anything on it, but it is possible. 

3. No. Once the home is repaired, the ALE coverage ends. If the insured remains quarantined, even if the area is a hotspot, the insured should be safe. There have been no indications that people quarantined in their homes have caught COVID-19. Coverage is provided only until the home is restored to pre loss conditions. 

QUESTION:

One of our insureds has asked "in the event someone came into the office with coronavirus and we had to hire a company to do extensive cleanup, will the cleanup expense be covered under our insurance policy.

ANSWER:

The commercial property policy provides coverage for direct physical loss or damage to covered property from a covered cause of loss. Since the property did not sustain direct physical loss or damage, then the extended cleanup would also not be covered. For coverage to apply, the extended cleanup would need to be a result of a direct damage covered loss.

QUESTION:

Under ISO Business Income Coverage form, my question is:

Considering closing of business due to an ordinance of law:

1-Would there be coverage under ORDINANCE OF LAW on Business Interruption. 

ANSWER:

First of all, the ordinance or law must be due to a direct physical loss or damage to covered property. If there is no physical damage to covered property, then there is no business income for ordinance or law that has to do with something like the coronavirus that's going on right now. 

Otherwise, if there is a direct physical loss, then as long as the ordinance or law is not related to the construction, repair, or tearing down of the insured property, then the business income will apply to that coverage. Under the ISO form, there is a provision for Resumption of Operations that states that if the insured does not resume operations, the policy will pay based on the time that the insured could have resumed operations as quickly as possible.

QUESTION:

Please help me understand if this policy would cover business interruption pertaining to the COVID-19. (Subscriber attached the Allianz CGL policy for this insured.)

ANSWER:

While there is no determining how a California court would view the coronavirus in view of bodily injury, we do not see any coverage for liability for the coronavirus under the CGL policy you attached. There is a total pollution exclusion endorsement on the policy which excludes contaminants or thermal irritants, as well as biological materials. Also there is a medical payments exclusion on the policy which would preclude coverage for any medical payments for any reason. 

QUESTION:

In light of businesses shutting down as a result of the Virus (restaurants in NH have been ordered to close) and they continue to pay their employees but do not receive any services from the employee. At the time of audit will these payments be included in the auditable payroll?

ANSWER:

Unfortunately, we cannot answer this question as it has to do with NCCI guidelines for the state of New Hampshire, and is not a matter of insurance policy interpretation.

For your convenience, here is the contact information for NCCI. You can call them and pose your question to them.

https://www.ncci.com/Pages/ContactUs.aspx 

QUESTION:

I am responding to a recent e-mail I received. There was a Q&A wherein it was asked if someone came into an office who had COVD-19, would clean-up be covered. I have been asked the same question with respect to a personal HO3 and HO5 policy. Would a cleanup of the home be covered? There is the same "direct physical loss" language in Section I coverages of the ISO HO form, so I would think not. But I want to get this nailed down.

ANSWER:

We're talking about a virus that can be cleaned with Lysol, Clorox wipes, and other household cleaners. Measles, mono, the seasonal flu, all require that the residence be cleaned pretty much the same way. A hazmat team isn't required for clean-up, nor is anything out of the ordinary that an insured probably don't already have on hand. There's no actual damage; the walls don't have to be repainted or replaced, nor does any carpet or floors. The residence just has to be cleaned. There is no actual physical damage, so no coverage. You may find the following helpful: What is Physical Damage?

QUESTION:

In Florida, many non-essential businesses were shut down due to orders from the Governor and various county governments.

My insured has a Businessowner's policy, with the Hartford. The policy includes $50,000.00 for viruses. Does civil authority prevail without physical damage? Civil Authority is a Coverage Extensions and Additional Coverages.

The Hartford denied the claim.

ANSWER:

Even though the endorsement gives coverage for viruses, that coverage only applies if the virus is the result of one of the "specified causes of loss" (other than fire or lightning); or equipment breakdown (see 1.a and b. under paragraph B.).

While an endorsement can add or remove coverage, all other provisions of the policy remain the same. Since the virus is not a "specified cause of loss", nor was it a result of a "specified cause of loss", then the coverage would not apply. Since the Civil Authority coverage is only triggered by direct physical damage, and the virus coverage is not applicable in this situation, then there would also be no coverage for the civil authority.