What does a second wave mean for Business Interruption?

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Ice cream has me thinking about a new wave of business interruption claims.

My favorite ice cream store, Bettie Rae’s, has had a tough go of it in Kansas City. During the pandemic, my family sought out our favorite comfort foods and Bettie Rae’s was at the top of the list. However, Bettie Rae’s was very cautious during the March to May business shutdown period and decided not to pursue curbside delivery of its delicious ice cream treats. From Mary Nguyen, co-founder of Bettie Rae’s:

“We appreciated all the support. Our continued popularity put a lot of our staff at risk for exposure and we asked them on a daily basis how comfortable they were with continuing to work,” she recalled, referencing the company’s short-lived attempt at curbside service. “As soon as we had enough [people] saying they didn’t feel comfortable anymore, we made the decision to slow things down and [ultimately] to shut things down.”

I was excited to learn that Bettie Rae’s opened back up recently. And so my family planned a trip to our favorite location for Father’s Day, only to come across this message on the ice cream shop’s website just before leaving our house: 

This has me thinking about the difference between business interruption claims during the March to May timeframe and how these claims may shift starting in June.

During the March to May timeframe, businesses often closed due to mandatory shutdown requirements imposed by state governments. Some businesses, including restaurants, were deemed essential businesses and allowed to stay open in order to provide curbside delivery of food. For many other non-essential businesses, this was not an option.

Now, as states open up, the onus is on individual businesses to determine how and when to open. The decisions a business makes may impact its ability to make an insurance claim.

The contractual bars to business interruption claims from COVID-19 are well documented; namely, many insurance policies contain virus exclusions, and many insurance policies require physical property damage. A majority of jurisdictions have interpreted the physical damage requirement to not include viral contamination.

However, if insurance professionals want to contemplate a more sympathetic legal environment to COVID-19 business interruption claims (i.e. social inflation), then examining the differences in business interruption claims may prove beneficial and instructive. 

Bettie Rae’s provides an interesting example (and one that does not follow traditional shutdown storylines). The ice cream shop closed initially because employees did not feel comfortable. Months later, the store shop closed because employees were “exposed to COVID.”

These are the types of facts that may matter when business interruption claims are litigated.

What are you seeing in your community?

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