April 27, 2020
Last week, I discussed potential insurance concerns that could pose problems for businesses that decide to reopen in defiance of government shut-down orders.
A mayor in a Wisconsin city acknowledges these concerns even as he advises businesses that his city will not enforce the governor’s order requiring closure of some businesses through May 26: https://www.msn.com/en-us/finance/other/hartford-mayor-to-allow-businesses-to-reopen-next-week-under-new-guidelines/ar-BB1377TO
According to the news article, the mayor advises that despite the announcement that the order will not be enforced in the city, he is not advising businesses to reopen if they could lose insurance coverage for doing so.
Ambiguous and inconsistent government orders may paradoxically make decisions even more difficult for businesses, who may lose the ability claim that their businesses were required to shut down if complying with the orders is arguably voluntary. For purposes of some insurance policies, business interruption coverage may hinge on a governmental edict requiring closure.
On the other hand, insurers may argue that businesses that reopen may lose coverage under exclusions that bar coverage for illegal conduct if the insurer can point to even one of multiple inconsistent governmental orders that has been violated by a decision to reopen.
As of now, most of the insurance coverage lawsuits that have been filed relating to COVID-19 concerns appear to relate to business interruption claims, but issues relating to decisions to reopen amid the COVID-19 crisis are likely to play a role in insurance coverage disputes in the not-too-distant future.
-April Barker
The comments on this site are not legal advice and do not create an attorney-client relationship.
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