As the COVID-19 pandemic spreads across the globe, countries have by and large placed limitations on how certain businesses can operate and have required other businesses to temporarily cease operations altogether. Businesses impacted by these restrictions have suffered substantial financial losses and, unsurprisingly, are looking to their business interruption insurers to cover these losses. As businesses begin to make business interruption claims, a stark contrast is arising between how U.S. and European insurers and governments are handling the influx of such claims related to COVID-19.
What is Business Interruption Coverage?
Business Interruption Coverage is a type of insurance coverage that compensates you for lost revenue when your business is unable to operate for a period as result of some physical property loss or damage caused by a covered peril. The most common example is a fire that damages a business property. If that damage prevents a business from operating as usual, business interruption coverage could provide the revenue your company would have made during the time it was unable to operate because the building was being restored. While a fire could certainly damage a tech company’s property, a tech company might be more vulnerable than other companies to certain types of damage, such as a weather-related event that knocks out the temperature controls in a data center, thereby resulting in the loss of, or damage to, electronic data. While nearly all companies in this day and age store data electronically, a data center can be more of the heart and soul of tech company than other types of companies. Continue Reading Fundamentals of Business Interruption Coverage—What Tech Startups Might Need to Know
Cryptocurrency is a digital or virtual asset that relies on cryptography to verify and secure transactions. Most cryptocurrencies have no central regulatory authority (i.e., the federal government), but rather run on decentralized systems through the use of blockchain technology to record transactions and assign new “tokens.” While blockchains provide a high sense of security and self-regulation, they are not risk-free. The insurance market has been slow to enter the cryptocurrency world, but some insurers have, and others are starting to explore this new terrain. In this blog, we provide a short overview of what you should know about cryptocurrency insurance in order to decide whether it’s right for you and/or your company.
In response to the COVID-19 pandemic, many business locations are shuttered, with work being done, if at all, only remotely. In addition, many businesses or owners of real property may have already filed or are considering filing insurance claims for associated losses from not being able to use their owned or leased premises. The purpose of this piece is to caution owners or tenants to review their property policies closely for vacancy-related conditions or exclusions.
There is growing evidence that the insurance industry is taking a concerted, joint approach to denying business interruption claims that relate in any way to COVID-19. Even if a business purchased insurance to protect against business interruption, civil authority orders, and other related events, insurance companies are discouraging and/or denying such claims without even reviewing the specific facts or insurance policy language that might be at issue. Unfortunately, insurance brokers and agents—on whom many businesses rely to give them advice in the first instance—are also discouraging claims. California Insurance Commissioner Ricardo Lara issued a directive on April 14, 2020 to address this inappropriate and damaging conduct.
Multiple insurance policies may ultimately be triggered as a result of the global COVID-19 pandemic. Companies should keep detailed records now to assist with any future insurance claims. The attached is a preliminary documentation checklist which will aid companies in maximizing their insurance once claims are filed.
The general intent of business interruption (BI) insurance is to cover unexpected losses to the business from the inability to use property necessary to run the business. The current form BI policies have a mechanism for making a claim for loss of revenue and/or increased costs to the business. They typically also have Civil Authority coverage to replace lost revenue when the government closes a business’s property, but carriers generally consider this a limited remedy for a short time period (such as a month). The real disagreement from carriers regarding coronavirus (COVID-19) claims is that there must be physical property damage, and even if there is property damage, the virus exclusion prevents claims for losses from COVID-19. Moreover, carriers argue that if these coverage issues are defeated in court or removed by legislation, the carriers do not have sufficient reserves to cover the anticipated BI-related claims caused by COVID-19. For example, the American Property Casualty Insurance Association has recently claimed that being forced by legislative intervention to cover small business BI losses related to COVID-19 would cost insurers $383 billion a month.
According to ZDNet, hackers successfully breached eleven major cryptocurrency exchanges in 2019 and stole more than $283 million worth of cryptocurrency (view reference here). We should expect this number to increase in 2020 as governments and cybersecurity experts warn that hackers will seek to take advantage of the coronavirus crisis to infiltrate corporations and as a vast number of employees move to teleworking. Specifically, cryptocurrency owners who maintain “hot wallets” should be particularly vigilant in protecting their assets because hot wallets are more vulnerable to theft and may not be covered by current insurance policies. Lloyd’s of London, however, recently announced the development of a new policy that will provide coverage for hot wallets. This blog has previously discussed the insurance industry’s attempts to develop new policies and endorsements to cover risks related to the cryptocurrency industry. See relevant past articles: Prepare for the Future With Cryptocurrency Insurance and The New Money: Cryptocurrencies and the Role of Insurance. Continue Reading Cryptocurrency Insurance for “Hot Wallets”
Numerous businesses facing class action lawsuits brought under the Illinois Biometric Information Privacy Act (BIPA), 740 ILCS 14 et seq., have sought insurance coverage under general liability policies only to receive blanket denials. It appears some relief may be on the way as the first Illinois Appellate Court to consider the issue affirmed the decision of the trial court and found in favor of coverage. West Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., 2020 IL App (1st) 191834 (March 20, 2020). Continue Reading First Illinois Appellate Decision Finds Coverage for BIPA Class Action Under General Liability Policy
The cannabis industry has many component parts, from growers to retailers (dispensaries), and everything in between. And each component part of this burgeoning industry has its own set of risks and exposures, for which it will need insurance protection. Continue Reading Fast Times at Ridgemont…Oh Forget It. The Cannabis Industry Is New; and So Are the Insurance Issues, Sort of.