With the spread of COVID-19 to the U.S., many insurers are preparing for possible COVID-19 related first party property claims by reviewing what coverages and exclusions might be applicable to such claims. While any claim is dependent on the specific terms of the policy issued to each insured, insurance companies should consider certain coverages and exclusions as a checklist. Partners Karen Karabinos and Eric Mull will address a coverage provision or exclusion each day. Today’s focus is on Ingress/Egress Coverage.
Coverage Provision – Ingress/Egress
In response to the COVID-19 shelter-in-place orders issued by the state, city or county authorities, insureds may seek to recover a business income loss under the Ingress/Egress clause of their property policies. Generally, the terms “ingress” and “egress” are not defined in policies, but the general meaning of these terms, as found in dictionaries, are synonymous with the term “access.” Similar to the civil authority coverage we addressed in Edition No. 2, Ingress/Egress coverage is designed to pay for the loss of income triggered when the insured’s property itself is inaccessible as a result of a covered peril.
While we were unable to locate any Georgia cases interrupting the Ingress/Egress provisions of a property policy, it is important to note that policies may have different requirements to trigger such coverage. We have found from our review of cases in other jurisdictions, some policies predicate coverage on physical damage preventing access, whereas other policies do not. Compare Fountain Powerboat Industries, Inc. v. Reliance Ins. Co., 119 F.Supp.2d 552 (E.D. N.C. 2000)(no physical damage required) with City of Chicago v. Factory Mut. Ins. Co., 2004 WL 549447 (U.D. N.D. ILL Mar. 18, 2014)(physical damage required). In policies in which physical damage is required, there may exist other requirements regarding the specific property damage that can affect whether coverage can be afforded.
For example, in Factory, the Ingress/Egress provision required that the access must be prevented as a result of “non-excluded physical damage ‘to the kind of property not excluded by this policy.’” Id. at *3. The court found that the policy identified “the kind of property” covered as real property in which the City had an insurable interest, “’or within 1,000 feet” of such property.” Id. The physical damage in Factory involved the 9/11 terroristic acts to the World Trade Center. Therefore, and as a result of the territorial limitations in the policy, the court denied coverage under the Ingress/Egress coverage. The court’s opinion in Factory case clearly shows that an adjuster’s analysis of a claim based on ingress/egress coverage provision must include a careful examination of whether physical damage is a required element and the property that must by physically damaged.
If there is a business interruption loss as a result of the inaccessibility of an insured’s premises, an adjuster’s analysis must then turn to evaluating the period of time in which there is a recovery for such a loss. We will be providing an analysis of the period of recovery for a loss of business income at a future update.
In Tuesday’s analysis, we will address extra expense coverage.