BUSINESS INTERRUPTION CLAIMS DURING THE PANDEMIC

Can Insurance Save Our Economy from COVID-19?

As the COVID-19 pandemic evolves, business interruption claims have become a national topic.  Pundits, insurance commissioners, trade spokespersons, national legislators, and even POTUS are weighing in on whether existing insurance contracts are enforceable by businesses now experiencing losses due to mandatory civil closures and other pandemic-related causes.

President Trump, speaking at a daily White House Coronavirus Task Force Update in early April, said that while some insurance policies specifically exclude pandemic coverage, “in a lot of cases, I don’t see it. I don’t see reference, and they don’t want to pay up. I would like to see the insurance companies pay if they need to pay.” These comments sent many lawyers to the courthouse to file a plethora of unwarranted lawsuits and burdened insurer’s across the country with defending the facts of the policy against the president’s implication that the “coverage” exists and they should “pay up”.

The question, though, isn’t whether it would be great for the economy if insurers swooped in and cleaned up the whole economic fall-out of an unprecedented national pandemic. The question is whether existing policy language creates a contractual obligation for insurers to pay and a bigger question of, Can they afford to pay?

Are COVID-Related Interruption Claims Covered By Existing Policies?

Feasibility aside for the moment, most “all-risk” policies wouldn’t cover these losses because, as we understand but the general public does not, pandemic-related losses do not cause “physical property damage”, a required trigger on most commercial policies for the extension of coverage for business interruption claims.  Plaintiff insureds might allege that the virus itself is a hazardous substance, and its presence at the business location constitutes property damage.  This strategy might mirror federal cases in New Jersey, Oregon, and New Hampshire, where the presence of ammonia or other harmful gases was found to be “property damage”.  However, if a plaintiff’s own house, car, church, grocery store, and every other place in the country is also filled with the same harmful substance (the virus), could one argue that subrogation needs to be equally extended to all of the above parties for contributing to the loss…the argument sounds as ridiculous as the strategy. 

Unfortunately, there may be more pressure on insurance companies to wave magic wands and fix the economy.  Class action lawsuits over denied business interruption claims are forming and lining up in court to be heard (to name just a few:  Bridal shop class-action over biz interruption claim denial; Pizza restaurant class-action; Midwest restaurants class-action; New Jersey restaurant class action). A Texas plaintiff movie theater is now suing Lloyd’s of London over a $1 million policy with a specific endorsement for pandemics caused by SARS-mutated viruses, which COVID-19 is.  After witnessing Ebola, Lloyd’s created this policy endorsement to plug the pandemic loophole, although hardly anyone could have imagined business interruptions on our current global scale.  Lloyd’s denied the theater’s claim because the endorsement doesn’t explicitly mention COVID-19, but this kind of hair-splitting over undefined policy terms can only be settled by expensive litigation and attracts negative press and political attention.

A group of small businesses in California is trying a different approach to their losses.  They filed a class-action suit against China, alleging business losses due to the COVID-19 pandemic.  Don’t hold your breath on that one.

Can Insurers Fund a National Bailout Via Interruption Claims?

On March 26, the Association of Property and Casualty Insurance estimated that business-closure losses for employers with fewer than 100 workers would total $220 billion to $383 billion per month. Then on April 6, those numbers were updated to $255 billion to $431 billion. (Note: these projections are ALL losses, not just those suffered by businesses that had purchased business-interruption coverage. Still, those are huge numbers, and more than the insurance industry could possibly absorb.

As North Carolina Insurance Commissioner Mike Causey said in his April 17 letter, “Standard business interruption policies are not designed to provide coverage for viruses, diseases, or pandemic-related losses because of the magnitude of the potential losses,” Causey said.

Causey went on, “Insurability requires that loss events are due to chance and that potential losses are not too heavily concentrated or catastrophic. This is not possible if everyone in the risk pool is subject to the same loss at the same time.”

Legislative Response To Denied COVID Claims

Legislators are scrambling to transfer businesses losses to insurers, even if they have to essentially re-draft existing insurance contracts.  Mike Thompson (D-CA) and eight Democratic co-sponsors have introduced House Resolution 6494, which would require insurance companies to offer interruption insurance for any viral pandemic.  It also appears from the language on its face that coverage exclusions in existing policies for business interruptions caused by viral pandemic, including our current COVID-19 pandemic, would be rendered void.

While this partisan effort from California might win applause from the sponsors’ constituents, it’s doubtful that the courts would support this unilateral attempt to rewrite existing contracts.  This House Resolution appears more grandstanding than a serious attempt at legislating since it’s almost certain to fail.

Representative Carolyn Maloney’s (D-NY) work-in-progress, a Pandemic Risk Insurance Act (“PRIA”), appears somewhat more likely to succeed.  This proposal would bring in the federal government to share risk on future business interruption policies, similar to our existing Terrorist Risk Insurance Act.  Some in the insurance industry have responded that paying all pandemic-related business interruption claims would wipe out reserves and preclude paying any other types of claims.

The future of this proposed legislation, and the growing number of lawsuits over denied claims, is uncertain.  For now, we wait to see the outcomes.  Meanwhile, the economic fallout from COVID-19 mounts and the cost of defending against these claims will only continue to rise.

Hurricane Season 2020

Handling catastrophic claims caused by hurricanes is a standard part of our business, and Vector Risk Solutions’ independent adjusters have both experience and well-honed procedures to handle these claims quickly and smoothly.  Even though these claims are routine because we expect and prepare for them every year, the devastation hurricanes create is anything but routine to insureds with damaged and destroyed buildings, interrupted businesses, and even injuries and loss of life.  When you need fast claims resolution during the 2020 hurricane season, Vector Risk Solutions is standing by to ensure a quick inspection and complete resolution for you and your policyholders.

Recent Hurricane Activity and Damages

According to the National Oceanic and Atmospheric Administration, 2019 marked a fourth consecutive year of above-average hurricane activity.  The only other such period came in 1998-2001, during which Hurricane Floyd wreaked an estimated $6.5 billion in damages and 76 fatalities on its path starting on the coast of Africa, followed by slamming into the Bahamas before careening up the Mid-Atlantic to New England.  Three years ago (2017) we experienced the fourth worst Atlantic hurricane season on record during the satellite era, according to Weather.com, during which three Category 4 hurricanes, Harvey, Irma, and Maria, caused an estimated quarter-trillion dollars of property damage in the US.  That’s a huge amount of adjusting, and Vector Risk Solutions’ independent adjusters were in high demand as insurers worked overtime to settle record numbers of claims.

Hurricane Season Forecasts for 2020

Forecasters at Colorado State University also predict above-average hurricane activity in 2020, with an expected 16 named tropical storms developing into eight hurricanes, four of which are expected to be major storms in Categories 3, 4, and 5.  (By contrast, an average hurricane season consists of 12 named tropical storms resulting in six hurricanes.)  Meteorologists base their 2020 hurricane forecasts partly on weak El Niño effects this past winter and the possible appearance of La Niña, which typically heralds increased hurricane activity, as it did in 1998-2001. Click here to see the effect of La Niña on the four previous years of consecutive hurricanes.

VECTOR RISK SOLUTIONS AT YOUR SIDE

So what’s all this meteorology got to do with us?  You already know – no matter what the experts say, storms are going to blow and tons of damage claims are going to pour in; claims need speed and accuracy to resolve. Who do you call?  Since you want fast, expert adjusting that makes you the hurricane claims hero, you’re going to put Vector Risk Solutions on speed dial.  Come hurricane season 2020, you’ll be glad you did. 

Want to know more about our Catastrophe claim services? Email us at info@vectorrisksolutions.com

Information about previous hurricanes:

https://en.wikipedia.org/wiki/List_of_United_States_hurricanes

https://en.wikipedia.org/wiki/Hurricane_Harvey https://en.wikipedia.org/wiki/2017_Atlantic_hurricane_season

Additional 2020 hurricane forecasts:

https://www.usatoday.com/story/news/nation/2020/04/02/hurricane-forecast-2020-eight-hurricanes-predicted-form/5110828002/

 

Liability Investigations: Special Handling Required

Liability claims, in both commercial and residential contexts, can be complicated but are fascinating in scope and the variety of causes and damages. Slip-and-falls, vehicle accidents, product and construction liability, unlike weather-related claims, are typically caused by human errors, negligence, and wrongdoing.  After a tornado rips through your insured’s commercial building, the damage may be extensive but at least the cause is clear unless underlying construction or engineering defects contribute to the loss. In liability claims, though, the insured may be partly or even wholly the cause of the accident. The insured may not be the injured party (this would be your potential third-party defendant, more on this later), and due to this, liability claims, like construction defect claims, are more likely to become adversarial.

Investigative and Interpersonal Skills Required

So along with the adjuster’s usual toolkit of loss assessment and policy knowledge, additional interpersonal and analytical skills are absolutely necessary.  The liability claims adjuster who is respectful and relatable is better at getting information and detailed statements from the myriad of involved parties, including possible witnesses and experts.  An in-house adjuster who has an excess of claims to keep moving, or who just isn’t that good at establishing rapport and getting folks talking, isn’t as likely to get a true picture of the events leading to the claim.  Speed in addressing new claims is imperative, but the liability claim investigation must get all the facts from the parties and witnesses in order to correctly determine not just loss, but also cause and fault.

Some of these parties, notably an injured third-party claimant, will lawyer up right away, and these situations require an especially careful, persistent and expert approach.  Experienced independent adjusters understand the role and limits of attorneys who represent injured parties in the adjusting process. Vector Risk Solutions independent claims adjusters are experts at listening and analyzing all parties’ statements with the goal of settling these claims quickly and inexpensively, or making them go away entirely if possible.

Preserving the Record

Adjusting liability claims also require meticulous record-keeping, including making and preserving audio/visual recordings from all parties and witnesses.  When human actions are involved, a good photographic record can only go so far to explain the events which lead to the claim. Claimants, the insured and witnesses sometimes die or become disabled prior to settlement, so while a video recording of a witness statement, for example, isn’t a sworn deposition, it may be crucial later after memories fade and witnesses are lost if the settlement can’t or doesn’t occur quickly.

Vector Risk Solutions is confident that our independent claims adjusters have the broad-based expertise and knowledge required to accurately analyze and adjust liability claims as well as other commercial, residential, daily, catastrophic and agribusiness claims.  We stake our reputation on our adjusters, and we’re ready to prove to you why our reputation is deservedly the best in our industry.

Contact Vector Risk Solutions today to get started, by calling us at 1-800-451-0798 orsending us a message on our contact page

Why hire an independent adjusting firm to handle a commercial agribusiness loss?

Has this happened to you?  A large loss, high-exposure commercial ag claim lands on your desk.  The insured is clamoring, and the pressure is on to expedite the inspection and keep the policyholder happy during a time of extreme stress and worry.  The claim involves damage to structures, grain stock, equipment, and the loss has long term implications for the insured and a business interruption claim will definitely follow the loss.  Quick, what’s your best play? Assign the claim to a staff adjuster with a full load of different types of claims, or call in an independent agribusiness claims adjuster at Vector Risk Solutions?  The winning play, combining speed, thoroughness, and specialized commercial agribusiness adjusting that makes you look good, is Vector Risk Solutions. You knew we’d say that, right? But why? With an (overloaded) staff adjuster more than capable of handling the loss, why Vector?

For one, most staff adjusters, depending on their experience level, are generalists who address a variety of commercial and commercial ag claims.  You and your insureds know, though, that agribusiness isn’t like selling paper or manufacturing computer components. Agribusiness involves specialized facilities for the housing, storage, and processing of harvested crops and animals.  Many commodities and animals require specific conditions of climate, weather, and pest/disease management inside of these facilities. A commercial ag claim, in particular, requires an adjuster with both a broad knowledge of commercial ag insurance policies and specialized knowledge of losses related to commercial agribusiness property damages.

Generic settlement recommendations don’t settle complicated ag claims.  The settlement drags out, wasting more money and time. The insured is angry and decides his carrier doesn’t understand the nuances of his ag business and isn’t qualified to insure it.

Independent commercial ag adjusters at Vector Risk Solutions, equipped with specialized knowledge and ready for swift action on your request, reassure the insured that their claim is in good hands. Best of all, our commercial ag adjusters make difficult settlement decisions easier and that makes you look good.

P.S: We handle crop liability and agronomy-related claims too!!

Ready to let Vector help you with your commercial ag claim? Reach out to us today to get started.

Commercial Agribusiness Experts

Commercial agribusiness claims can get complicated fast. Even seasoned adjusters and engineers need to be at the top of their game, and ready to face anything and everything head-on. Our team of commercial adjusters is experienced in reviewing policy coverage and assessing commercial agribusiness damages to provide accurate recommendations to our clients and their policyholders. So when things get complex, we get down to business.

 

With losses that range from small commercial agribusiness facilities to direct consulting on complex problems during a large agribusiness crisis, our adjusters can handle whatever situation arises. We realize that communication begins in the offices and boardrooms of our clients and ends in the fields, farms, and Ag facilities across America.

 

Vector Risk Solutions provides experienced adjusters for losses related to:

  • Poultry Confinement Houses
  • Grain Bins and Silos
  • Local and Regional Cooperatives
  • Equine Facilities
  • Dairies
  • Cotton Gins
  • Livestock Facilities
  • Commercial Processing Facilities
  • Nurseries
  • Irrigation Equipment
  • Cattle Ranches
  • Agronomy and Crop Liability Claims

On a daily basis, agribusiness professionals work with equipment of all sizes and encounter weather challenges that affect a wide variety of structures such as barns, living quarters, silos, stables, and grain storage facilities. At Vector Risk Solutions, we understand the complex estimates and repair processes related to claims on these types of structures.

 

Our specialty is zeroing in to provide service that effectively meets the needs of our clients. We also understand that every claim is different and that treating every claim as a unique case will yield the best results. Thanks to our highly qualified team of adjusters you can rest assured that all facets of any commercial agribusiness claims are covered. With years of experience handling claims all over the continental United States, we are prepared to succeed with any claim you send our way.

Commercial Claims Experts

Not every claim is the same. In fact, it’s quite the opposite, and here at Vector Risk Solutions we treat each claim as a unique case. We directly address the issues at hand, allowing us to zero in on the heart of the issue. We also know that when it comes to commercial claims it is necessary to zoom out and look at the big picture. With years of service and experience, Vector Risk Solutions is continually at the top of our game.

When a disaster strikes, leaving your client with a loss, processing a claim is the last thing they want to deal with. That’s why our commercial property services can be implemented at a moment’s notice. Vector Risk Solutions provides experienced adjusters in the commercial field for losses of all shapes and sizes.

Our experts can handle losses for any type of client, including:

  • Shopping centers
  • Municipal buildings
  • Large and small retail stores
  • Restaurants
  • Hotels
  • Condominiums
  • High-rise offices
  • Hospitals
  • Manufacturing facilities
  • Commercial Ag Facilities

Not only do we understand the intricacies of these types of claims, but we also have a track record of handling claims for standard commercial, self-insured, captive and reinsurance clients. We know that client retention is directly related to the claims experience, and it is our priority to stand in the gap between the policyholder, the agent, and underwriting to make sure that your clients are safe and secure.

Our adjusters are also experienced in managing the commercial claims process. We understand the need to recommend the engagement of professional services such as business income loss experts, forensic accountants, engineering and reverse engineering firms, expert witnesses, and commercial construction consultants. If you need experts who work well with others, are available within a moment’s notice, and prioritize the experience of your clients and policyholders, then you’ll be glad you chose Vector Risk Solutions for a superior claims experience!