By Chad Dorsey, CIC, CRIS, Vice president, Brown & Brown of Florida, Inc.

Legacy resorts across the country are faced with the harsh reality of lost revenues associated with COVID-19 pandemic and wondering if this is an insurable event and if filing a claim with their insurance provider is the prudent course of action.

The official coverage position of an insurance company can only be determined after an adjuster has thoroughly reviewed the specific details of a claim and analyzed policy terms. We recommend every resort maintaining Business Interruption coverage proceed in filing a claim in order to confirm if coverage is available. Claims can be filed directly with an insurance company or with the help of your agent.

Our interpretation of standard policy language raises a number of concerns surrounding coverage available to resorts as a result of COVID-19. First, in order to qualify for Business Interruption coverage, the claim must be a result of direct physical damage. A major hurdle in qualifying for coverage from this event is the lack of a physical damage component at resort properties. Physical damage from a fire, lightning or hurricane can be easily demonstrated to an insurance adjuster while property damage from a virus could be considered a stretch.

Let’s assume that one can effectively argue that their resort sustained property damage as a result of this pandemic, is that all that is needed to qualify for coverage? No, the adjuster must then confirm if the claim is a result of a covered cause of loss. You will frequently find coverage within resort property policies for loss of income as a result of Civil Authority and many resorts are currently faced with closure as a result of government closure but to qualify for coverage the cessation of business must once again be a result of direct physical damage from a covered peril. Though resorts won’t generally find within their policy specific exclusions for Virus or Infectious Diseases, its common to find Microorganism Exclusions specifically excluding any loss directly or indirectly relating to microorganisms whose presence poses a threat to human health. COVID-19 losses could very well fall under this policy exclusion.

The only way to determine the official coverage position of your insurance company will be to file a claim. Every resort should nominate a primary point of contact to communicate with an insurance adjuster who will likely perform a review over the phone but may also want to perform a site visit and meet with a resort representative. Refer to the attached COVID-19 Claim Preparation Checklist to serve as a guide in tracking the business interruption expense incurred by your resort.

Chad Dorsey, CIC,CRIS, Vice President – Brown & Brown of Florida, Inc.,
Vacation Resorts Specialty Division, cdorsey@bb-wpb.com,  O (561) 688-5077, www.bb-wpb.com

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