Contract law is often regarded as one of the driest and most dull subject matters in law school and practice, however recently more and more businesses are reaching out to attorneys asking for help with it for one big reason… any guesses?
The pandemic has created circumstances beyond the likes that anyone alive has seen. For the first time in decades, ExxonMobil, the fuel and energy company, had a negative financial quarter.
Many states are slowly reopening businesses as the number of casualties subside. However, not all businesses are primed to reopen, because many did not survive the losses from the pandemic. If a multinational oil corporation suffered losses, what do you think happened to many small businesses?
One of the most important aspects of business is planning, and in doing so, you prepare. You prepare by signing a lease, you prepare by hiring an employee or several, you prepare by purchasing inventory, you prepare by renting or buying necessary equipment, or any combination of the above. These all involve one common factor among them, a contract. And almost every working-class citizen in the United States tends to have one kind of contract that they dread reading, their insurance policies.
These policies are agreements between you (or your employer/company) and an insurance company that say you will pay a certain amount (varying of periods) for a certain kind of coverage. This exchange keeps insurance companies in business. Insurance companies are like casinos, they take a calculated risk and try to take more money from you than they have to spend on you.
This article is not advice against insurance, nor is it meant to reflect insurance companies in a bad light; it is rather just to be informed about a relevant issue between business owners and insurance companies. Insurance is a valuable business that should not be villainized in itself, but there are bad actors in the industry just like any other industry.
The only universal piece of advice I can think of for anyone purchasing insurance is to READ YOUR POLICY.
That is generally the golden rule.
During this pandemic, many business owners have made claims on their insurance policies based on “property loss.” Specific policies can insure a building or a place of business against loss in the case of a fire, vandalism, etc. The policy language will determine which type of loss is insured, but if the policy generally just says the “loss of property” (a generality you normally pay more for in premiums), sometimes circumstances that render your property not usable (i.e. a pandemic) should be covered under property loss.
Different business owners are already taking these claims to court because insurance companies are not paying saying “property loss” is not applicable here.
In contract disputes usually contract drafters are held to a higher standard than the non-drafting signer. The general idea is “you wrote the rules, you’re going to play by them.”
Many court cases often play off of other precedents already set in their jurisdiction, so the trend of courts ruling against the insurance company on these grounds is likely going to stand unless struck by a higher jurisdiction court.
The casino knows the rules, and just because the tables are hot and people are trying to collect does not excuse “the house” from paying, the same principle applies to an insurance company.
If you’re unsure of your likelihood of a claim being successful, or already have tried and need representation, contact Eden Law, where our managing partner Rachel Brenke is seasoned in contractual disputes.
Written by Christian Dudley