As the events surrounding the COVID-19 pandemic unfold, the insurance industry is bracing itself for the multitude of claims it will inevitably face. To maximize potential coverage, policyholders can and should act now to analyze their coverage so that operational decisions can be made with insurance issues in mind. The current economic shutdown is causing losses that will trigger insurance coverage claims under many lines of coverage, including:

• Business Interruption (BI)
  Closings and supply chain disruptions are causing losses in virtually every sector of the economy. BI coverage may be available for losses caused by a facility shutdown or the shutdown of a supplier’s facility. Under some policies, coverage may be available only where there is “direct physical loss.” Whether viral contamination could constitute “direct physical loss” warranting a closing is one of many issues that should be considered when analyzing coverage scenarios.
• Event Cancellation
  Event cancellation coverage may be available for losses arising from the cancellation or postponement of covered events. Cancellations and postponements, however, are typically treated differently and coverage may be dependent on causation (e.g., government orders, physical inability to proceed, etc.). Decisions the policyholder makes in response to the pandemic, therefore, can be determinative to the availability of insurance coverage.
• General Liability
  Bodily injury and personal injury (e.g., false imprisonment) claims under general liability policies will inevitably be made as a result of the pandemic. Businesses should consider what coverage they may have for such claims—and what issues will drive coverage determinations—when making difficult decisions about continuing or resuming operations as this situation plays out in the coming weeks and months.

Businesses are finding themselves in a rapidly changing environment and are making tough decisions on a daily—even hourly—basis. Insurance coverage may only be available for the consequences of those decisions if each unique fact pattern is analyzed under each potentially implicated insurance policy before operational decisions are made. Miles & Stockbridge’s  Insurance Recovery team is actively working on claims and loss mitigation strategies for its clients. Please contact the authors of this alert if we can help you through this difficult time.

Joseph Beavers and Alexander Creticos are members of the Coronavirus Task Force, a cross-disciplinary team that can quickly and efficiently deploy talent from relevant practices to address concerns and issues in real time.

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