By Attorney Dan Jacobson, Principal of Jacobson & Associates, and Former Governor on the Board of Governors of the California Insurance Guarantee Association
A recent Orange County Register editorial said, “[L]osses resulting from the COVID-19 pandemic are excluded from coverage under typical policies that cover the interruption of business from events such as fires, floods and natural disasters.” This statement is so overbroad, so simplistic, so shallow, and so devoid of the basics of insurance law, that it is at best MISLEADING and is at worst just plain WRONG!
There is business insurance coverage for coronavirus business losses – depending on the business insurance coverage policy language in your business insurance policy. Whether your business insurance policy is entitled “Business Interruption Insurance,” “Builder’s Risk Insurance,” or something else pales in importance to the words that are in the individual business insurance policy.
California insurance law mandates that:
Courts “interpret insurance coverage broadly
in order to afford the insured the greatest possible
protection, and conversely interpret exclusionary
clauses narrowly against the the insurer.”
All of this applies to coronavirus insurance coverage.
The wording of some insurance policies, written for the hospitality industry, specifically provide insurance coverage for losses caused by disease. This language may cover your restaurant.
Other language in business insurance policies may be more ambiguous. In such a case California insurance law may again be applicable.
“[G]enerally any ambiguity or uncertainty
in an insurance contract
[note: an insurance policy is a contract]
is to be resolved against the insurer issuing that
policy and in favor of the insured.”
COVID-19 poses devasting affects to many contractors. Some contractors have “Builder’s Risk” insurance policies, some have other policies. The category of the business insurance policy is of little importance when compared to the actual words used in the individual business insurance policy. Depending on the words of the specific Builder’s Risk policy, that policy may afford insurance for COVID-19. Other policies that construction contractors may have, may have the right language to protect against COVID-19 losses.
What is important for any business are the words used in the business insurance policy. Those words are controlling.
A precedent-setting Orange County case summed up the first and vital step to understanding legal writings. “If the first rule of medicine is ‘Do no harm,’ the first rule of contracting should be ‘Read the documents.’”
What to do – right now
You need an insurance coverage opinion, from an insurance coverage lawyer. Jacobson & Associates’ principal Dan Jacobson has worked with, practiced, and studied insurance law for decades; and, was a Governor of one the largest insurers in California. He is an expert in insurance cases. Mr. Jacobson teaches contract law (an insurance policy is actually a contract), and has authored over 40 scholarly legal articles, many.
Please email or call us. We’re working out of our respective homes pursuant to Governor Newsom’s Executive Order N-33-20. But our phones are forwarded, and our laptops are tuned into one of the best electronic law libraries. Also after thirty-one years of practicing as an attorney, Mr. Jacobson has amassed his own large, personal electronic law library.
We realize that we’re fortunate to be able to continue to practice from home. Let our good fortune be yours. Call us at 714-505-4872, or email us at firstname.lastname@example.org. (Please do not email any documents. We do not accept such until we accept you as a client.)
Please be safe.
This article is about
California law only. This article is not intended to be and is not legal advice
or any other type of advice. The information contained in this article should
not be relied upon in lieu of consultation with an attorney. If anyone does
rely upon the information in this article in lieu of consultation with an
attorney, he or she does so at his or her own peril, and assumes all risks arising
out of such reliance.
 The Villa Los Alamos Homeowners Assn. v. State Farm General Ins. Co. (2011) 198 Cal.App.4th 522, 530.
 United States Elevator Corp. v. Associated Internat. Ins. Co. (1989) 215 Cal.App.3d 636, 647