• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Sign Up
  • Contact Us
  • Advertise With Us
    • Monthly Banner Ad
    • Sponsor An Email
    • Post A Job
    • Product Launch

Agency Checklists

Massachusetts-inspired Insurance News & More

  • JOBS
  • Checklists
    • Starting Your Own Massachusetts Insurance Agency
    • Purchasing An Insurance Agency in Massachusetts
    • Why, When, & How: Times When A Massachusetts Insurance Agent Should Use A Business Broker
    • Deciding Whether or Not to Outsource Your Customer Service?
    • Employment Contracts & The Non-Compete Clause In Massachusetts
    • Hiring An Insurance Producer In Massachusetts
    • Insurance Agent to Agency Loans In Massachusetts
    • Moving Your Massachusetts Insurance Agency
    • How Premium Financing Can Work For Your Massachusetts Insurance Agency
    • Remuneration Audit Checklist
    • Selling Your Massachusetts Insurance Agency
    • Applying For An Agency Loan
    • When The Auditor Calls
  • Data
  • Events
  • InsurShop
    • Insurance Quiz Time
    • Insurance Books
      • Innovation Titles
      • Improvement
      • Leadership
      • Licensing
      • Marketing
      • Sales
    • Insurance Films
    • Insurance Glossary
  • Partner News
You are here: Home / Insurance News | Massachusetts / COVID 19 | Coronavirus in Massachusetts / InsurOp-Ed: Is Cleaning a Surface Contamination a “Repair”?

InsurOp-Ed: Is Cleaning a Surface Contamination a “Repair”?

April 28, 2020 by Bill Wilson


Is cleaning a surface contamination a “repair”? In other words, does “direct physical loss or damage” refer to permanent alteration of property that can only be remedied by repair or replacement and not to simple impairment of the use of that property?

From my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes”:


Intent

When reading an insurance contract, what is the intent of the parties, from a coverage standpoint, expressed by structure, syntax, semantics, and context of the policy language? In a general sense, that’s an easy question. The intent of most insurers is to cover what was actuarially contemplated by the premium charged. The intent of most insureds is to cover every event that results in financial loss. As expressed in the Dedication of this book by California Chief Justice Malcolm Lucas, “No one knows what evil lurks in the hearts of men…but it’s all insured.”

Needless to say, insureds are not happy when a claim is denied and insurers are not happy when they are compelled to pay for a claim not contemplated by the actuarial department and the drafters of the policy form. Insureds can minimize their grief by recognizing that insurance is not a commodity and that the adage “You get what you pay for” often holds true. You bought cheap, you got cheap. Insurers can reduce the likelihood of continuing interpretive misery by, as outlined in the last chapter, revising the policy language that resulted in unintended coverage.

The legal system takes a more pragmatic view of what is meant by “intent” of the parties when it comes to interpreting a contract, specifically an insurance contract. In determining coverage, or lack thereof, the judicial consensus, by word if not by action, is that the first goal is to identify the intent of the parties entering into the insurance contract. In doing so, most courts will try to determine the meaning of words and phrases within the four corners of the policy via a literal reading of the form language in its plain and ordinary meaning and within the context of the facts of the claim….

So, what is the intent of the ISO CP 00 30 business income form when it comes to coverage for viral surface contamination? The primary business income coverage is triggered by “direct physical loss or damage” to property on the premises. Coverage applies during the “suspension of operations,” a term defined as [emphasis added]:

“Period of restoration” means the period of time that:

a. Begins:

     (1) 72 hours after the time of direct physical loss or damage for Business Income Coverage; or

     (2) Immediately after the time of direct physical loss or damage for Extra Expense Coverage;

     caused by or resulting from any Covered Cause of Loss at the described premises; and

b. Ends on the earlier of:

     (1) The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or

     (2) The date when business is resumed at a new permanent location.

The consensus is that the viral contamination can usually be removed from the surface of property by simple disinfection. Even in the absence of that, the virus allegedly dies of its own accord within about 3 days. That sounds less like “direct physical damage” and more like an indirect loss involving simple temporary impairment of the use of the property.

The time period for coverage is based on when property should be “repaired, rebuilt or replaced.” Does simply cleaning temporarily impaired property surfaces constitute repair, rebuilding or replacement? Or does “direct physical damage” refer only to a permanent alteration of property that must be remedied by actual repair or replacement and not just a temporary impairment of the use of that property?

Based on the logic of this analysis, one could argue that this coverage was never intended to apply to “damage” that can be remedied by the use of Clorox wipes in a matter of hours in most businesses. In other words, the language in this definition refers to “direct physical damage” that requires an actual repair or replacement of the damaged property.

For a deeper dive into these issues:

  • “Business Income Insurance…Does It Cover Coronavirus Shutdowns?”
  • “Is a Viral Contamination ‘Physical Damage’?”

Additional articles on the insurance implications of the COVID-19 pandemic can be found on my blog at www.InsuranceCommentary.com.


Agency Checklists, MA Insurance News, Mass. Insurance News, Bill Wilson, Insurance Commentary

Bill Wilson

William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years.

He is the former Director of Education & Technical Affairs for the Insurers of Tennessee and, prior to that time, he was employed by Insurance Services Office, Inc.  He is a graduate of the Illinois Institute of Technology with a B.S. degree in Fire Protection & Safety Engineering.

Copyright 2016-2018 by InsuranceCommentary.com. Reprinted with permission.

  • Website
  • Twitter
  • LinkedIn
Print Friendly, PDF & Email

Filed Under: COVID 19 | Coronavirus in Massachusetts, InsurOp-Eds, News | Miscellaneous Tagged With: Bill Wilson, Covid-19 insurance issues Massachusetts

Primary Sidebar

Latest Agency Sales

Salem Five Insurance VP Andrew Drayer

A Q&A With Andrew Drayer: Salem Five Insurance’s New Senior VP For Agency Acquisitions And Strategic Growth

Agency Sales in Massachusetts | 2020

Insurance Agency Mergers & Acquisitions in Massachusetts | 2020

Defying All Expectations 2020 Ends Up Being A Boom For Insurance Agency Mergers & Acquisitions

Duffy Insurance Announces 10th Acquisition With Purchase Of The Barry & O’Connor Agency

More Agency Sales

2020 NAIC Market Share Reports

NAIC 2020 Market Share Reports

Comments & Updates

  • Tony Lucacio on Associate General Counsel For Goosehead Insurance Terminated After Participating In January 6th Events In Washington, D.C.
  • Annie on Vermont Mutual Distributes $1,000,000 to COVID-19 Relief Efforts
  • Andrew J. Carpentier on The CAR Year In Review: Highlights From The 2020 Annual Report
  • Frank Lombard CPCU ARM on Time To Act As A Trusted Advisor About Earthquake Insurance?
  • Mike Ryan on InsurOp-Ed: Biden Tax Plan’s Impact on Insurance Agencies

AC In Your Inbox

Massachusetts Law Updates

Insurance Coverage lawsuits Massachusetts

First Circuit Holds Total Pollution Exclusion Does Not Apply Where An Endorsement May Provide Separate Grant Of Coverage

An insurance coverage lawsuit in Massachusetts confirming the importance of reading an insurance policy as a whole versus in parts.

Raynham Agent’s Non-Compete Escape Clause Included In Agency Sale Still Valid After Subsequent Stock Sale

A case deciding whether a non-compete clause included by the former owner of Eagle Insurance in his sale to People’s United Insurance, is still valid after that agency’s subsequent sale to AssuredPartners.

Boston Red Sox And MLB Aim Legal Beanball At Insurers With Billion-Dollar Lawsuit

Boston Red Sox and MLB Aim Legal Beanball At Insurers With Billion-Dollar Lawsuit

30 Major League Baseball teams have filed suit against their 3 insurers seeking $1.6 billion in Business Interruption losses from the COVID-19 shutdowns.

Should Insurance Agents Help Advocate Claims?

Court Rules An Obscure Statute Cured Contract Breach For A Three-Year Delay In Undisputed Claim Payment

A discussion of a recent Appellate Division of the District Court ruling a little-used statute can protect an insurance entity from a breach of contract for the payment of money.

More Mass. Law Updates

CAR News

The CAR Year In Review: Highlights From The 2020 Annual Report

Last Look 2020: The Private Passenger Auto Insurance Marketplace in Massachusetts

Last Look 2020: The Commercial Auto Insurance Market Share in Massachusetts

CAR Begins The RFP Process For Commercial Servicing Carriers And Possible Commercial Pool Changes

View More CAR News

DOI News

Massachusetts Moves Up In 2020 Insurance Regulation Report Card

Mass. Division of Insurance Issues Four COVID-19-Related Bulletins Before 2021

Massachusetts Stays The Course As The 12th Largest Insurance Marketplace

DOI Announces Hearings For Two Separate Insurance Company Acquisitions of Control

View More DOI News

Insurance Fraud

Peabody Contractor Indicted For Insurance Fraud And Payroll Tax Evasion On $2.5 Million Of Under-The-Table Wages

Massachusetts Shares in $39.5 Million Multistate Settlement Agreement Over Insurance Company Data Breach

Arthur J. Gallagher Suffers Ransomware Attack

MA Attorney General Sues Keches Law Firm For Referring Injured Workers On Comp To A Mail-Order Pharmacy For Kickbacks

More Insurance Fraud News

Footer

Agency Checklists

About us
Contact us

14 Summer Street
Suite 102
Malden, MA 02148
617-598-3800
info@agencychecklists.com

Advertise on Agency Checklists

We offer a variety of ways to get help promote your company or product.

Announcements
Email Sponsorships
Partnerships
Custom Collaborations

*Affiliate Disclosure

Please note that any of Agency Checklists’ articles might contain one or more affiliate links. This means that any subsequent purchase resulting from these links may result in a commission for us, but at no additional cost to you. For example, as an Amazon Associate, Agency Checklists earns a commission from all qualifying purchases. By working with affiliates we can continue to keep Agency Checklists subscription free. Thank you for your support.

SEARCH OUR SITE

Explore Our Archives

Copyright © 2021 · Agency Checklists · All rights reserved.