During the ongoing new coronavirus or COVID-19 pandemic, many businesses across a variety of industries have felt pressure to stay afloat amid ongoing mandated closures. Even as many begin to get back on their feet while reopening, the need for insurance carriers to cover losses sustained during these closures is paramount for many business owners. While we’ve discussed the ins and outs of business interruption policies at length, there are still several endorsements to examine in order to determine where and if coverage is available, including a leader property or attraction property endorsement.
Leader Property and Attraction Property Endorsements
Insurance endorsements are amendments or additions to existing insurance policies that change the terms or scope. Leader property or attraction property endorsements can be included in standard business interruption policies to provide coverage to the insured for a direct physical loss, damage, or destruction to business property. This property can be a separate business located within a specified distance to the insured’s property that attracted business for the insured. Typical examples of such property include amusement parks, casinos, malls, or destination retailers, among others. For instance, smaller stores at a strip mall might consider leader property or attraction property coverage to cover them in the event of decreased customer traffic and sales that would take place if the flagship store at the mall – say a Target or Nordstrom, is damaged or destroyed.
Some businesses carry business interruption coverage for their own business locations and rely upon those, while others might only want coverage in the event a business it relies upon is damaged. Furthermore, policies like contingent business interruption insurance cover losses the insured’s business might suffer if the operation of a key supplier, customer, or leader property on which your operations are dependent is shut down by an insured peril.
Endorsements and Business Interruption Coverage for COVID-19
When it comes to business interruption coverage endorsements, its important to remember that policy language can be difficult to comprehend; and, with the ongoing COVID-19 pandemic, these already muddied waters get even murkier. This is, in part, due to language that either excludes viral or bacterial events or requires physical damage to trigger coverage.
With regard to a leader or attraction property endorsement, it’s important to note similarities to civil authority coverage because both types are triggered by the closure of businesses due to physical damage, including the mandated closures of airports, convention centers, hotels, and other attractions adversely impacted by the pandemic or related orders that have resulted in the loss of revenue at the insured’s location.
In addition to this, many commercial property policies provide extra expense coverage, which applies to certain necessary costs incurred to continue business operations. This may include temporary relocation costs as well as costs incurred to transition employees to work-from-home arrangements, among a variety of other expenses.
Under standard insurance policies, physical loss or damage is necessary to trigger coverage under the policy. In the event COVID-19 manifests at an insured’s premises and patrons or employees become ill, insurers will likely argue such effects do not amount to direct physical loss or damage. Insurers can also be expected to argue possible contamination, proximity to other contaminated premises, or public fear do not constitute physical loss or damage.
Endorsements and extensions such as business interruption by a civil authority, attraction or leader property, and contingent business interruption are all options policyholders can utilize if available to them. However, insurers are likely to view these riders as being triggered only by physical damage following a covered loss; thus, leaving no coverage available where the virus is present or suspected to be present. Even if physical loss or damage is established, many policies contain contamination-related exclusions insurers are likely to invoke.
COVID-19 Insurance Claims Attorneys
Commercial insurance policies can be incredibly difficult to navigate, and the influx of COVID-19 has only made it more cumbersome for businesses to obtain the coverage they need during this unprecedented time. At Raizner Law, we have extensive experience thoroughly reviewing insurance policies to determine what coverage is available and helping business owners hold insurance carriers accountable for delays, denials, or underpayments of valid claims. If your business has been impacted by COVID-19 and you would like insight on your coverage options, contact the insurance attorneys at Raizner Law today.