Hurricane Ian and its aftermath are wreaking havoc in the Caribbean and Florida. While the situation is developing rapidly, Ian has moved through Florida after initially making U.S. landfall as one of southwest Florida’s most intense hurricanes in history. It produced catastrophic storm surge exceeding 10 feet in certain locations, destructive winds packing maximum sustained winds of more than 140 mph and relentless rainfall.
The economic impact of the storm will be felt by businesses and individuals across Florida and the southeastern United States for some time. Many businesses have and will continue to suffer direct damage to property and lose income due to the resulting interruption of their operations, but many other businesses are also likely to lose substantial income due to evacuation orders, disruption of utility service and disruption of the operations of key suppliers or customers. Florida is home to many businesses in the real estate, retail, hospitality, senior living, distribution and entertainment sectors that may face significant exposures to their operations.
Businesses should examine their insurance policies closely and not indiscriminately accept coverage denials premised on flood exclusions, or other excluded perils.
1. Assess the policies you have and reassess the policies you should buy in the future.
2020 has brought a host of unwelcome events: pandemics, fires, floods, cyberattacks, financial failures, etc. An insurance program tailored to the risks and business opportunities of your specific company can provide for recovery during dark times, and specialized insurance products can help you safely expand your business. It is time to consider how tailored your current program is, and how you can better align insurance assets to your business in the future.
2. Use indemnities and additional insured status to expand your insurance assets.
Everyday business for many companies involves the use of terms and conditions; sales or services orders; and leases that address indemnification, minimum insurance requirements, and additional insured status. A well-thought-out use of additional insured status can allow you to leverage the insurance assets and insurance premiums of counterparties.
3. Ensure that you get the full benefits of your liability and property insurances.
Insurance policies provide many coverages, policy limits, and extensions that may not be readily apparent, and all of which may provide substantial financial assistance in the event of a loss. In addition, specialized forms of insurance, additional riders, or policy wording upgrades can better tailor policies to your specific business attributes. Use the renewal season to explore your options.
4. Avoid “conventional wisdom” about what is or is not covered.
With insurance, words matter! In fact, the wording determines the outcome. Do not accept statements about what others think a policy does or should cover. For example, claims for intentional wrongdoing and punitive damages often are covered by liability policies. Likewise, losses from your supply chain may be covered under your property policies. Non-payments of debts and breaches of contractual promises are covered under various forms of policies. Let the words lead you to coverage.
5. Give notice once you know of a loss or claim.
Typically, notice should be given soon after a loss, claim, or lawsuit, but remember that a delay in giving notice will not necessarily result in the loss of coverage. Consider the potentially applicable insurance assets that may apply and give notice.
6. Insist your insurers fully investigate claims.
Insurers have a duty to investigate claims thoroughly and must look for facts that support coverage.
7. Watch what you say.
Communications with an insurer or an insurance broker regarding a lawsuit against you or a loss are not necessarily privileged.
8. Don’t take “no” for an answer.
A reservation of rights is almost always the start of the insurance claim process, and a denial should not dissuade you from pursuing your rights. Even if coverage is not obvious at first, it may be there, if you look in the right places.
9. Document, document, document your claim.
Whether it is a first-party loss or a liability suit against you, write to your insurer and document your submission of information and materials. Require your insurer to respond in writing and to explain its position. A well-documented chain of correspondence narrows disputes, helps to limit shifting of insurer positions, or helps to make such shifting very apparent if your claim proceeds to formal enforcement measures.
10. Insist that your insurers honor their duties.
In the liability context insurers frequently owe broad duties to defend with independent, conflict-free counsel, even if uncovered claims dominate the lawsuit against you. In property insurance contexts, insurers have duties to help you on an expedited emergency basis to protect your interests immediately after a loss. It is important to hold insurers to their duties to protect you immediately upon assertion of liability or after a loss—delay only benefits insurers.
Across the globe, governments and public health officials are banning large gatherings and imploring citizens to practice “social distancing” in order to slow and prevent the spread of the coronavirus outbreak, or “COVID-19.” As a result, festivals, sporting events, conferences, and community celebrations are being canceled or postponed, leaving event organizers of all sizes—from major production companies, to would-be newly-weds—wondering how to recoup their substantial losses.
The pandemic has led to an unprecedented number of high-profile event cancellations and the potential for billions of dollars in lost income and other damages to the entertainment and sports industries. Just last week, concert giants Live Nation and AEG Presents suspended all tour engagements in North America, and world-famous gatherings like the Coachella Valley Music Festival and Stagecoach Music Festival were postponed until October. The threat of the virus has also taken its toll on professional sports—both the National Basketball Association and the National Hockey League suspended the remainder of their 2019–2020 seasons, and the National Collegiate Athletic Association canceled its March Madness tournament altogether. Not even “America’s favorite pastime” has been immune from the effects of the virus—Major League Baseball postponed the start of its 2020 season indefinitely. The economic cost of these cancellations is certain to be substantial. Continue reading “CANCELED: Guidance for Policyholders on Event Cancellation Insurance in the Wake of COVID-19”