Legal issues arising from the pandemic. It’s gonna’ get messy…

Time to read that insurance policy. Image courtesy of Adobe Stock.

ECFA presented a webcast Navigating Critical Legal Issues in the COVID-19 Crisis on 4/7/20. If this condensed summary of issues is at all interest to you, check out their website,www.ECFA.org. Webcast is now available at no charge if you are a registered member or if you are an ECFA member. Registered status is free.

I won’t be giving any legal advice here. Instead I will merely identify issues for you to consider. Consult with your attorney if you need to go in depth.

A long yet partial list of legal issues to consider

Intentionally assess whether you perceive taking a PPP loan under the SBA rules will have any effect on your ability to exercise your religious freedom. Webcast provides good guidance.

OSHA – there are general rules under federal OSHA and state equivalent regulations affecting the workplace. These may be more significant in a coronavirus environment.

Look carefully at the sick leave requirements for employers with less than 500 employees. Investigate the possibility to offset extra cost against payroll tax deposits. Do your research.

CARES Act loosened the rules for withdrawals from retirement plans. Check out the rules.

If you have a self-insured health insurance plan, be sure to check out the rules for covering testing and treatment.

Employers could consider making Qualified Disaster Relief Payments to staff. Check carefully what is allowed and other restrictions.

Force majeure provisions in contracts allow one party or the other to cancel the contract in event of certain major disruptions. You have to check the contract carefully to see what is allowed. Speakers pointed out a sample clause they have reviewed recently is a bit fuzzy given current circumstances.

Insurance coverage for business interruption or damage to property is going to be very messy. Various things can trigger such coverage. There are specific requirements to meet and specific exclusions.

Major issue identified by the speakers will be the definition of what constitutes property damage, in other words does an office contaminated with coronavirus constitute property damage or not. Another issue is it may be hard to prove such a contamination. The keyword involved is “direct physical loss.”

Another of the issues for insurance coverage will be exclusions for viruses.

There are substantive arguments in favor pf and substantive arguments opposed to typical business interruption/property damage coverage applying to the current pandemic. Read your policy. Consult your insurance broker. May need to bring an attorney in.

Speaker pointed out that insurance companies are going to be including even broader exclusions in new policies they write for next policy term. Since such policies are on a “claims made” basis, the policy in effect when you file a claim is what will determine your coverage. Implication cited is if something happens in 2020 (like the coronavirus pandemic) but you file notice with your insurance company in 2021 under a renewed policy, then the policy you renew at the end of this year will be in play. Speaker mentioned a strategy to preserve your rights. I’m not able to describe that sufficiently well. Needless to say you need to read your insurance policy, consult your insurance broker, and consider bringing an attorney in. (Notice an emerging pattern in the strategy organizations should take??)

Event cancellation insurance will be a big deal for those organizations who have coverage for those events that generate lots of revenue.

Director & Officer coverage – speaker recommended very careful attention be paid to the questions on your renewal application. Answers need to be given that are accurate and complete.

Speaker mentioned that denial of coverage can be claimed based on false or incomplete answers. Speaker mentioned that is an expensive issue to litigate if you get into a dispute. Same comment as before – read your renewal application, consult your insurance broker, and consider bringing an attorney in.

It’s gonna be messy…

After watching the presentation I realized there are going to be a lot of messy legal issues playing out over the next several years from the pandemic. Be intentional and careful now. It might be wise to get lots and lots and lots of advice.

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