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The legal battle for business interruption claims

Great White Pizza in Panama City Beach sits empty like many other small businesses due to...
Great White Pizza in Panama City Beach sits empty like many other small businesses due to COVID-19. (WJHG/WECP)(WJHG)
Published: Apr. 16, 2020 at 8:02 PM CDT
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Jim Sickler is the owner of Great White Pizza in Panama City Beach, but ever since the coronavirus pandemic took hold, he’s been facing a great big problem.

Sickler said, “the vegetables that are cut and prepared for the pizzas are only good for a certain amount of time… I did have to throw away a bunch of dough, and I did have to throw away some cheese that had molded.”

Now he’s considering filing a business interruption claim with his insurance company. He did something similar following Hurricane Michael.

Sickler said, “because the power had gone out, that’s underneath the umbrella of interruption of business. I was able to make a claim and receive some money back for at least the cost of the goods.”

But this time he and other business owners may not fare as well.

Mohammad Sherif, partner at Mubarak, Sherif & Pladipo, PLLC, said, “insurance companies don’t consider this an insurable event. They always took the position that it’s not covered.”

Sickler estimates he’s lost about $100,000 in sales since the mandated closure, but now legislators and lawyers are gearing up to argue- what constitutes a business interruption?

“Why isn’t that a covered event? Because they do have a direct physical loss,” said Sherif.

He said the insurance industry can argue if you can’t see the physical cause as in the case with a virus it can’t trigger coverage, "but there’s also a case law that says carbon monoxide that you can’t see is a loss,” he said.

Meanwhile, lawmakers across the country are floating around draft legislation that would establish a federal backstop for pandemic business interruption claims and kick in once all claims hit $250-million.

“Because as it is I’m still trying to pay all the bills that are dealing with this restaurant, the electricity, the gas and things and the money in the bank account is slowly dwindling down to zero,” said Sickler.

He also said he applied for the PPP loan, but the program just announced Thursday it has run out of money.

Representative Gaetz sent the below statement saying:

“I’m extremely honored to be named to President Trump’s Opening Up America Again Congressional Group. I will be working closely with President Trump and his administration to reopen our nation, including businesses and industries in the Florida panhandle, and reignite the economic vitality our country has enjoyed under his leadership. I have full confidence in President Trump as he leads our nation through this pandemic. I’m excited to serve on this new task force and look to advancing his America First vision for our great nation as we work to build an even brighter future for all Americans.”

While representatives with the state’s insurance commissioner declined to comment, they did send the following information:

"Business interruption insurance policies can vary greatly and policyholders are encouraged to review their policy closely and maintain close communication with their agent or insurer regarding their coverage. If a consumer or business believes that an insurer is not acting in good faith with regards to their policy, they are encouraged to reach out and report it. The DFS Consumer Hotline and other important information on reporting can be found here.

The Florida Office of Insurance Regulation (OIR) has taken significant action in response to COVID-19, including actions which positively impact small businesses.

OIR has directed insurers through Informational Memorandum OIR-20-04M to be flexible with premium payments in order to avoid a lapse in coverage. This includes relaxing due dates, extending grace periods, waiving late fees and penalties, and allowing payment plans. Insurers are encouraged to only consider cancellation of policies if all possible efforts to work with consumers to continue coverage have been exhausted.

- Multiple auto insurance companies have reached out to OIR providing information that they will temporarily provide premium credits back to policyholders during this time. OIR will continue to work with insurers to implement these premium credits to provide immediate benefit to Floridians.

OIR understands many insureds may be temporarily utilizing their personal automobile for purposes that might otherwise be considered commercial use. Through OIR-20-04M, OIR has encouraged insurers to consider allowing such use during the COVID-19 public health emergency.

Should a small business have a claim, OIR has strongly encouraged insurance companies, agents, consumers, and employers to explore virtual options for underwriting and adjusting claims in lieu of in-person property inspections and for premium audits of employers’ records to maintain social distancing and follow recommended safety measures.

In response to Governor Ron DeSantis’ Executive Orders 20-51 and 20-52, and Chief Financial Officer Patronis’ Directive 2020-05, OIR issued Informational Memorandum OIR-20-05M to all insurers and entities authorized to write workers’ compensation insurance. First responders, health care workers, and others that contract COVID-19 due to work-related exposure would be eligible for workers’ compensation benefits under Florida law. OIR expects workers’ compensation insurers to comply with all of the provisions of Florida’s Workers’ Compensation Law and will take appropriate action in the event of non-compliance.

Commissioner Altmaier is absolutely committed to assisting consumers and businesses and is working with state and national partners and stakeholders on the response to COVID-19 and will continue to work closely with Governor DeSantis, CFO Patronis, and the Florida Cabinet on its response to COVID-19."

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