Compared to all the industries impacted by the coronavirus pandemic, restaurants are arguably hit hardest. With their industry relying heavily on in-person contact from seating arrangements to food, the landscape of the present moment has done irreparable harm.
Amid reopening, restaurant owners who once hoped for a resurgence of business are now facing yet another plot twist— as employees test positive for the virus, they are having to close their doors once again, some for a few weeks, and some permanently.
It’s these very situations that business owners have insurance for. An unexpected crisis occurs and in comes the insurance company to cover loss in income, hampered business operations, and even general liabilities.
Unfortunately, we are finding that the restaurant industry is being left behind with insurance companies denying coverage amiss the pandemic. While there are some potential ways in which lawyers are helping business owners fight back, it’s a battle that’s far from over.
Since the 2003 outbreak of SARS, ironically another strand of coronavirus, insurance companies carefully crafted their business interruption insurance to exclude damage from viruses.
Businesses have created this restriction through a clever use of terminology and requirements— namely, most policies require physical property damage to be triggered.
While this makes insurance coverage useful for natural disasters or property damage, for the restaurant business during the pandemic, it’s nearly useless. Lawyers are trying to fight these provisions in court however, using a variety of arguments ranging from force majeure to equating sick customers to physical damage.
As we have spoken about in a previous article, there is a new legal playbook being written as litigation spikes and business owners’ right for the coverage that is integral to their survival.
Force Majeure is a legal principle which protects parties who are forcibly unable to fulfill contract responsibilities. This argument rests on the fact that the contractually bound party had no way of knowing, at the time of entering the contract, that external occurrences would prevent them from fulfilling their promise.
Impossibility: Acts of God
While similar to “forced Majeure,” this principle is broader when argued as it is not limited to the specific verbiage found in a contract at the time of signing.
Frustration of Purpose
Finally, in this legal principle we find a situation where both parties involved in a contract are technically able to do the work but where there would be no point or value in doing so due to external circumstances.
The main purpose of all these arguments is to try and invalidate the original contract agreement, thus providing a work-around for the terms of that same contract. By making a policy unenforceable, it gives businesses a change to litigate the policy, potentially winning themselves coverage for any losses suffered during the pandemic.
These losses, known as damages, would include any negative monetary shifts to your business. Payroll challenges, poor revenue, and orders that went canceled or unused are all fair game in this category.
However, even if all insurance claims could be won to some extent or another, the financial backdrop of these payouts begins to grow increasingly unstable.
As insurance companies fight back, there is a growing rhetoric regarding the economic instability resulting from either end of this crisis.
If insurers ignored the requirement of damage to property, effectively allowing all coronavirus claims to pass through, there is the fear that these insurance companies would not be able to float the costs. This destabilizes their industry in an unprecedented manner, potentially bankrupting the entire industry.
On the reverse side, restaurants make up a large part of the US economy. As they falter under lost business income and are rejected even after years of paying for insurance coverage, restaurants will begin to close permanently. This is particularly true for independently owned establishments with less financial support.
As restaurants cling to the final dollars paid out by PPP loans and look to a future where a second such lifeline may never occur, the future appears grim.
In these troubled times, a good lawyer might spell the difference between your business surviving the pandemic or becoming yet another fatality. As a law group seasoned in business interruption claims above any other type of insurance dispute, we are here to help your business receive the disbursements you deserve.
Located conveniently in West Palm Beach, we can handle all your interruption insurance needs. Staffed with experienced lawyers, there is very little we have not seen and can get started on filing a claim as quickly as possible.
We are dedicated to helping you and your business recover from the devastating effects of Coronavirus. Start on the right foot by contacting us at 561-729-0095 to schedule an appointment and get your business back on the right track.