Breweries Should Submit Business Interruption Claims

April 24th, 2020 • by David Wallace
David Wallace

David Wallace

Dave Wallace is the Strategic Business Advisor at Gilroy Kernan Gilroy (GKG) an independent agency in New Hartford, NY. Dave earned his Bachelor of Science degree from the University of Massachusetts in Amherst MA. He has 25 years of experience in working with agribusiness-based associations and developed niche membership programs for;
• Brewers Association
• NYS Brewers Association
• Northeast Dairy Foods Association
• Dairy Farmers of America
• Group Captive for QCS Purchasing
Dave has worked on both the insurance carrier and agency sides of the commercial insurance industry and publishes articles for dairy trade journals.

Covid-19 and the related fallout opens questions many of us have never encountered. Updates continue to change rapidly and the “answers” are often unique to your business.  Striking a balance between information overlord and following high-level recommendations may serve you well. 

Do standard commercial policies provide coverage for Covid-19?   

The answer is most likely no. However, the answer can only come from your insurance carrier. To obtain their response you must file a notice of claim which we recommend you do.  We have filed a blanket notice of claim for all our clients that we write a commercial package for and that contains Business Interruption protection.  We recommend you do the same.  We feel it’s important to establish a record with your insurance carrier and begin collecting real-time data on your lost revenue and extra expenses.

Insurance Facts:

  1. Every insurance policy is different and should be examined
    • Which insurer issued the policy?
    • Which coverage was selected?
  2. Some policies may provide coverage
  3. If there is a possibility of coverage and legislative involvement – submit a claim

Three Emerging Scenarios:

  1. State and Federal legislators and courts could overturn the BI exclusions.  The area with the most potential is a federal solution where carriers would be required to cover claims and the federal government would create a fund to backstop the carriers.  Discussions at the federal level are happening, yet as with any legislative solution there are many moving parts.
  2. Absent an insurer / government solution, relief could come in the form of state and federal packages for businesses. NYS has proposed legislation that would compel property insurers to cover claims by small businesses due to Covid – 19.  Then insurers would submit claims for reimbursement to the NYS Department of Financial Services for reimbursement (to be funded by assessments to all insurers doing business in NYS). The bill is in committee presently.
  3. With or without either of the first two scenarios happening,  there will most likely be tax implications.

Next Steps for Policy Holders with Business Interruption Coverage:

  1. Report your BI claim
  2. Carrier will:
    • Deny coverage
    • Accept coverage
    • Reserve their rights to obtain more information

Bottom Line:

Every policy is different and should be examined.  With all the unknown answers as to how this event will play out, be proactive and submit a Business Interruption claim to your carrier. 

Gilroy Kernan Gilroy is continuously monitoring proposed legislation and will provide meaningful updates as they develop.  Please do not misinterpret this as seeing a resolution in the short term; rather, we are providing recommendations and are looking out for a solution that does not yet exist.