As they learned in the closure of the COVID-19 pandemic, a business that lost water service in troubled Jackson, Mississippi, said this month that its business interruption insurance policy will pay for lost customers and lost revenue. I have noticed that it is not always useful for
“As far as I understand, most of the reports have been denied,” said Pat Fontaine, executive director of the Mississippi Hospitality and Restaurant Association.
Restaurants in state capitals have said they will have to temporarily close their doors or spend hundreds or thousands of dollars a day to provide bottled water, ice, portable toilets and other emergency measures. I’m here. crisis. Fontaine said the water problem exacerbates existing problems at the restaurant, including labor shortages, supply chain problems and inflation that has pushed up the prices of supplies and food served to patrons.
On August 29, unrelenting rains caused the nearby Pearl River to flood parts of the city. Muddy water at one of Jackson’s two water treatment plants has exacerbated a long-standing problem, halting service to most of the population of 160,000, officials said.
According to news reports, water pressure had been restored in most areas by Tuesday, Sept. 6, but residents and businesses remained under boiling water notices for the foreseeable future.
The water problem has hit the restaurant industry particularly hard. Walker’s Drive, one of Jackson’s oldest and most famous restaurants, Derek, co-owner of his inn, Emerson, said water problems made it “impossible to do business in Jackson, Mississippi.” It’s becoming,” he told a local TV station.
Other stores remained open, but with few regular customers.
John Tierre, owner of Johnny T’s Bistro and Blues, told The Associated Press. “They are probably moving their operations to suburbs where there are no water problems.”
Another entrepreneur, Bobby Fairley, owns Magic Hands Hair Design on the south side of the city.
One day last week, she canceled five appointments because she needed high water pressure to wash the treatment out of her clients’ hair. She’s also had to buy water to shampoo her hair, try out the fit, schedule as much as she can, etc. When customers don’t come, she’s losing money .
“It’s a huge burden,” she told AP. “I can’t afford that. I can’t afford that at all.”
Despite purchasing business interruption insurance, many business owners find that their policies are kept under wraps.
The Mississippi Insurance Authority said it had received several inquiries from businesses about the issue and had determined that most policies would not cover losses. The policy has been interpreted as requiring direct physical damage to the facility.
“For business interruption to be covered, it must be due to a covered cause of loss,” Andy Case, director of consumer services for the Mississippi Department of Insurance, said in a statement. “Under commercial business policy, this means there must be physical damage to the business due to the compensable cause of loss.”
Case noted that in most cases of COVID-19 business disruption, it was determined that the closure would not cause physical damage to the business.
“And in the case of our water crisis, there will be no physical damage to these businesses or buildings,” he said.
While some policies include endorsements that address utility losses, most of them also require physical damage to utility company property from covered hazards such as storms . Timothy McLendon, a Texas-based insurance expert who has been in the business since 1972, said floods are not usually covered.
Fontaine said some of Jackson’s businesses are seeing a ray of hope there. State and federal investigations into the water fiasco have led to storms that caused river flooding to hit utilities. may be considered a cause of physical damage.
According to reports, Jackson’s water problem has been growing for more than 20 years. The city sees its share of whites fleeing to the suburbs, and city officials say Jackson doesn’t have the tax base to make a multi-billion dollar system upgrade. Years of underfunding have hampered maintenance and repair.
That’s bad news for Jackson’s business, which is hoping for insurance relief. Most utility loss guarantees specifically exclude losses due to “maintenance, deterioration and neglect (all of which are well-documented causes of Jackson’s water problems),” consumers say. The case of the service officer said.
Filing a lawsuit against an insurer that has denied a claim may provide little relief if a claim due to COVID-19 is any indication. Nearly 87% of his hundreds of COVID-related business interruption lawsuits nationwide have been dismissed, according to the University of Pennsylvania Law School tracking service. Most cases sank because the policy included virus exclusions or because it was interpreted that physical damage to the property was required for coverage to take effect. Courts have said that in most cases, the virus will not damage facilities.
However, legal thinking may be evolving. A paper soon to be published in the legal journal Tort, Trial & Insurance Practice says that for decades, insurance policies have considered “physical loss” as distinct from physical damage, and the use of assets due to contamination. claims that it may include impossibility. According to the paper’s authors, many of the recent COVID court rulings have been misinterpreted, including that of Charles Miller, an attorney at the California Center for Insurance Law.
So unless business interruption policies include virus or pandemic exclusions, they “must be construed to provide compensation,” the attorney wrote. It would also apply to Jackson’s restaurant business policy, which does not include exclusions.
Some of Jackson’s businesses may now sue insurers for its consideration. He said it was likely.
“There has been some discussion about suing the City of Jackson to recoup some of the losses,” he said.
Above: John Tierre, owner of Johnny T’s Bistro and Blues in Jackson, Mississippi, said many customers disappeared while the city had no running water. (AP Photo/Rogelio V. Solis)