Page 6 - New England Condominium August 2020

6 NEW ENGLAND CONDOMINIUM -AUGUST 2020 NEWENGLANDCONDO.COM Greater Boston’s Full Service Condominium & Property Management Firm 617-202-3815 admin@yifmanagement.com www.yifmanagement.com | • Competitive Customized Rates! 100% Transparency! • • No Unnecessary Fees! Guaranteed Communication! • other carriers that were a little less aggressive in their verbiage are going to have to see how the claims come across the table and deter- mine how to resolve them.” Wayne Dow, also a partner with JSG In- surance, sees some uncertainty in how carri- ers are reacting and will react to the current situation. “In my experience, for insurance carriers it’s always been a matter of looking at corporations, especially in urban settings the coverage. Look at the facts of the claim, where property tends to be more vertical try to make it fit the coverage, and then figure than horizontal, another insurance compli- out the response at that point. I don’t think cation raises its head: lack of rent payments the carriers are sitting in their offices trying to from non-resident sources. In other words, a figure out how to disclaim coverage. I believe restaurant on the ground floor that normally this pandemic has been something that obvi- ously no one expected or accounted for. In my month, covering a substantial portion of the discussions with carriers, they view this as a community’s operating budget, has slowed new situation. And I think everyone is trying down—or closed down entirely—as a re- to remain calm and try and figure out what sult of the pandemic. Many businesses carry claims are going to look like, how they’re go- ing to come in, and how they should be mea- sured.” Carrier Response Four months into the pandemic, claims are beginning to come in—and policyhold- ers are beginning to see what considerations insurance companies are taking with respect to existing policies and COVID-19. “We’re expecting an influx of claims,” says Flem- ing, “but truthfully, what I’ve been saying for the last few months is that right now we are ‘pregnant’ with claims, but in a symbolic nine months we’re actually going to give birth to those claims. To date, we haven’t seen CO- VID-related claims come through in bulk. What we’re seeing more of right now is on the commercial side of things—business inter- ruption and workers comp-type claims.” According to Fleming, “We are expecting to see claims that struggle to prove causation, that basically maintain that they believe the insured contracted the virus at a community location, in one of the amenities. We believe carriers are going to have a very direct re- sponse to those claims.” For his part, Dow stresses that “as phased reopening continues, you may start to see those claims develop, but I think it’s going to be one of those issues where we may see a ‘shotgun’ approach. Carriers are going to be seeing all kinds of stuff—from discrimina- tion claims to harassment in the actual cases themselves. And it’s at that point when I think insurers are going to sit back and look at these claims. I’m sure they’ve looked at their cov- erage forms and tried to figure out exactly how best to respond, but there’s going to be a measured response by all carriers on all lines of coverage affected by this. I think because of the fact that things aren’t completely open in some locations, and the possible ramifica- tions of events in those that have opened, we haven’t yet seen exactly what we’re going to be looking at in terms of claims.” Fleming adds that “there’s already some pretty specific verbiage in most general li- ability policies talking about virus, bacterial pathogen, and biohazard exposure, and the exclusion of defense. So in the absence of that, there are some other caveats that carriers are going to that indicate that they are really go- ing to dig in their heels. At the end of the day, if somebody says, ‘hey, I contracted the virus at the community amenity,’ it’s going to be dif- ficult for them to prove that that actually oc- curred, unless they lived in a bubble with no one else and went only to that amenity.” Non-Health-Related Claims For some condo associations and co-op pays the association or co-op $40,000 per what’s called business interruption insurance to cover their rent in this possibility. Many landlords also carry rent interruption insur- ance. But what if the insurer won’t pay? Fleming says that right now, it’s a difficult gray area. “It all depends on triggers. This is interruption coverage. It’s in there, it’s on the policy. Only problem is getting to it. All that’s needed is the proper key to unlock the poli- cy benefits. The insured must show that the event is a cause of loss. Without that cause of loss, we struggle to get access to that coverage. I actually read an article yesterday morning about how lawsuits from insureds versus in- surance carriers are in the hundreds, because they’re trying to trigger that business income coverage. Businesses are saying they have the coverage. They’re claiming all sorts of trig- gers, whether it’s civil authority, or just the existence of COVID, the state not allowing them to open—all of these situations. They’re saying these events should have triggered the business income coverage; the carriers are saying, ‘no, we don’t see the trigger.’” Both Dow and Fleming say they expect to see a growing—and consistent—level of resis- tance on the part of insurance carriers to all kinds of insurance claims for the foreseeable future. Clearly, condominium and homeowners associations and co-op corporations are at risk of getting caught in the middle of this poten- tial legal morass. Whether an insurance claim results from an individual claiming to have contracted the virus through some perceived negligence on the part of the association or corporation, or as a result of civil action that closed down a business whose monthly rent represents an important component in the community’s financial and operational plans, it’s ultimately the unit owners or shareholders left holding the bag. An already tense and dif- ficult situation may be made even worse by competing self-interests. n A J Sidransky is a staff writer/reporter for New England Condominium, and a published novelist. INSURANCE... continued from page 1