Massachusetts business owners and sole proprietors: know your rights under your commercial insurance policies! The Coronavirus (“COVID-19”) promises widespread business interruption across a huge variety of sectors, from restaurants and bars to manufacturing and contracting, and everything in between. In Massachusetts in particular, Governor Baker has just announced a statewide ban on gatherings of 25 people or more and ordered than restaurants cease serving food and drinks on site. Even more restrictive measures may follow. You may be wondering what, if any, coverage you might claim for business losses or interruptions under your commercial insurance policy. Or you may have already received a notice from your insurance company claiming they owe no coverage at all. Now is the time to carefully review the wording of your policy, bearing a few things in mind.
First and foremost, your insurance company is not at liberty to retroactively and unilaterally restrict or limit coverage under your policy. Insurance contracts are contracts like any other – a bargained-for exchange between two parties formed the moment they are executed. One party to that contract cannot change its terms without the consent of the other. To the extent your insurance company may claim it owes no coverage under a specific “exclusion,” the burden will be on your insurance company to prove that the exclusion applies, and “exclusions” are construed strictly in favor of coverage. To the extent there is any ambiguity in your insurance policy about whether coverage exists for an event like COVID-19, it is a well-recognized rule that any ambiguity will be construed against your insurance company and that you, the insured, will be entitled to the more favorable interpretation. This rule of interpretation applies with particular force to exclusionary provisions. “If the meaning of the contract language is unclear, we ‘consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered.’” Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 635 (2013), citations omitted.
You may also be in a position where based on representations made to you by your insurance company, you were under the impression there would be coverage for this type of loss, only to find out now your insurance company is refusing to cooperate. You may still be able to obtain coverage under a legal doctrine known as estoppel. Even more generally, in Massachusetts your insurance company has a statutory duty to act in good faith towards you, its insured. Two statutes in particular require insurance companies to act in good faith. G.L. c. 176D catalogues fourteen separate unfair claim settlement practices. And G.L. c. 93A prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce,” including insurance. Under these statutes, should your insurance company force you to litigate a question of coverage where you are ultimately successful in court, you may stand to gain double or triple damages, plus attorneys’ fees, interest, and costs.