Denied an insurance claim in the time of COVID? How consulting a lawyer can help

This article was written for our sponsor, Paynter Law.

It's been months since the coronavirus started its spread across the country. Since then, stay-at-home orders and government-mandated shutdowns have barred doors, shuttered windows and halted operations for countless businesses and companies.

For those in the Triangle area, state and county stay-at-home orders took effect in early March, closing down establishments like dine-in restaurants, movie theaters, gyms and salons.

Now, two months later, many of these orders are still in effect and business owners are working overtime to stay afloat, innovating their operations and searching for long-term financial solutions. For many, an insurance payout could serve as that much-needed lifeline.

"Business owners are struggling and are spending entire days putting out fires. Employees are struggling as well. The climate of uncertainty has been taxing, but there has also been tremendous resilience. Business owners are being creative, their staff is being creative, and they're trying hard to maintain operations and to do what they can," said Gagan Gupta, an attorney at Paynter Law. "In the midst of all this, insurance will play a key role in helping businesses survive this crisis."

Many firms like Paynter have encouraged business owners to file claims as soon as possible, despite the fact insurance companies are certain to deny some claims. Otherwise, business owners risk forfeiting their rights to coverage. Now, with weeks passed since the initial claims were filed, those rejections are starting to roll in.

Even in the Triangle, businesses are feeling the pressure of denied insurance claims.

At Crank Arm Brewing in downtown Raleigh, operations have been severely limited. A skeleton crew is still able to supply beers for curbside pickup and delivery to bottle shops and grocery stores, but the taproom — what co-owner Aaron Eckhart calls the "heart and soul" of the brewery — has had to close its doors.

After news of the shutdown, Eckhart submitted a claim to the brewery's insurance provider, hoping to receive a payout. Instead, his request was met with a denial.

Since a claim is one of the few available avenues for financial aid, Eckhart decided to have the policy reviewed by Paynter Law, despite the rejection. If the firm is able to show that the loss of income stems from the government shutdown and not the virus directly, Eckhart could have a new chance at financial compensation.

"As soon as I get all the paperwork together, I'm going to get it over to Paynter, because they said that there may be a case for arguing that it wasn't COVID that did this — it was the shutdown that did it," Eckhart said. "As far as the claim, it's the same thing for most other businesses I've talked to — all of them said they got denied. Some are fighting, some are not. I guess we're all looking on a case-by-case basis, but it sounds like there's just a blanket denial for most people."

In getting a lawyer to review his policy, Eckhart is already ahead of the curve. Many firms offer policy reviews for little to no cost, and in Gupta's experience, most policies offer at least some possibility of coverage.

One of the biggest questions on the minds of lawyers and insurance agencies is whether or not coronavirus counts as physical loss or damage, even if no damage has been done to the structure of the building. Other avenues for compensation include business interruption coverage and civil authority coverage, the latter of which could be argued due to the government ordering the interruption of business.

For affected businesses still in the process of filing a claim, it's best to follow the lead of Eckhart and do so as soon as possible — wait too long, and you could forfeit your chance of a payout. In Gupta's experience, much of the hesitation towards filing a claim stems from the assumption it will be denied. Even so, he advises filing regardless.

"What we're finding is that sometimes business owners will say, 'We have a virus exclusion and so therefore we're not covered,' and we say, 'We need to look at it and advise you, or somebody needs to look at it and advise you specifically.' Even if they have a virus exclusion, it may not always apply in every circumstance or to every loss," Gupta said. "Even if the claim is denied, we still recommend getting one on file regardless, because it's a fairly simple process. Then if in six months or eight months or a year, something happens or changes, you'll be in the hopper."

"Everything depends on the specific language in your policy. That's key. It's all about the specific causes, the specific provisions, the specific language in the policy itself," he continued. "It's very difficult in the insurance world to generalize whether something is or is not covered. If we do get a denial, then we'll assess what the letter says and talk with the business owner about next steps."

While waiting to make the next steps on reevaluating his own claim, Eckhart and his team at Crank Arm have had to get creative. The brewery was recently featured in the New York Times for its unconventional approach to bottling beer, repurposing plastic milk jugs to cut costs and increase inventory.

Until it's deemed safe to resume normal operations, this sort of adaptation is essential.

"It's an unprecedented time, as everyone's aware of, and being able to pivot and be nimble has been key. On a day-to-day basis, we're dealing with a different beast than what we were accustomed to 90 days ago, 30 days ago, even a week ago or yesterday," Eckhart said. "We're lucky we have our health, a loyal customer base, and not to be in the position where we're completely shuttered."

This article was written for our sponsor, Paynter Law​​​​​​​.