Mayoral Orders and Proclamations Provide Further Support for Business Interruption and Property Insurance Claims, April 6, 2020
Mayors are joining governors and legislators throughout the country in issuing orders that may support policyholder efforts to obtain business interruption and property damage coverage for COVID-19-related losses. New York City Mayor Bill de Blasio has issued Emergency Executive Order No. 100, which provides that “this order is given because of the propensity of the virus to spread person to person and also because the virus physically is causing property loss and damage[.]”
New Orleans Mayor LaToya Cantrell has issued a similar proclamation in which she stated there is “reason to believe that COVID-19 may be spread amongst the population by various means of exposure,” including by attaching to surfaces, “thereby spreading from surface to person and causing property loss and damage in certain circumstances[.]” First-party property insurance policies that include a business interruption component may cover lost “business income,” among other things, but often require a suspension of the insured’s operations caused by “direct physical loss of or damage to property.” Insurers have latched on to this language in denying claims, arguing that a suspension of business due to COVID-19-related closures and government orders does not result from physical loss or damage to property; thus coverage for business interruption losses is not available.
The statements of these mayors, as well as those of governors in Louisiana and West Virginia, suggest otherwise and may provide a further leg up for policyholders pursuing coverage for COVID-19 claims in these jurisdictions and elsewhere.