06.04.2020
Many entrepreneurs who have had to close their businesses due to the Covid-19 pandemic have business interruption insurance and are now faced with the question of whether this will cover the resulting loss of sales.
Business interruption insurance is a property insurance that covers the business but not the person of the business owner (established case law since 7 Ob 22/90 of 28 June 1990)[1]Such policies generally insure the loss of earnings resulting from an impairment or interruption of a business - however, it must be checked on a case-by-case basis which risk is actually covered by a particular policy and whether the specific business interruption or impairment falls under this. Ultimately, it depends on the content of the individual policy and this must be checked carefully, although the contractual provisions of different insurers can sometimes differ considerably. General statements cannot be made in a serious manner.
In any case, it should be noted that the policyholder is fundamentally obliged to ensure that the damage incurred is reduced as far as possible in the event of an insured event. To do so, the policyholder must usually also obtain instructions from the insurer. A breach of this obligation can lead to the insurer being exempt from paying benefits. If the business owner has the (even theoretical) possibility of making claims under the Epidemic Act,[2] to claim (for example because the business was closed due to a specific official order, because individual employees were "isolated" within the meaning of Section 7 of the Epidemic Act, or because sales losses are due to traffic restrictions pursuant to Section 24 of the Epidemic Act), such compensation must in any case be applied for (and the relatively short deadline of 6 weeks for submitting the application must be observed!).
Of course, many of the current business closures and disruptions are not due to measures based on the Epidemic Act, but to regulations based on the COVID-19 Measures Act[3]which, among other things, prohibited customers from entering business premises and imposed a general ban on entering public places (with exceptions). These regulations did not provide for any right to compensation for the losses caused.
But the use of other support measures created by the legislature in response to the Covid 19 pandemic may also be necessary due to the obligation to mitigate damage: applications for support from the hardship fund, for grants from the Corona Aid Fund, applications for short-time work for employees, etc.
In summary: The coverage check has to be carried out on a case-by-case basis and is not easy. It is necessary to assess the basis of which official measures led to the closure and the wording of the respective insurance conditions. Waiting periods must be kept in mind, as well as the expected argument that (basically covered) losses will not be compensated.[4] which would have occurred even if a specific business closure had not been ordered by the authorities or caused by official measures. In an emergency, the only option is to file a lawsuit against the insurance company, but you should be well prepared.
In any case, contact should be made with the insurer as soon as possible and an agreement reached on what measures the policyholder should take to forestall the objection of breach of the obligation to mitigate damages.
We are happy to support you in resolving legal issues related to the Corona crisis and to help you enforce claims. We do not pursue the interests of our clients in the context of mass proceedings or so-called class actions, but exclusively in the context of individual advice. The reason for this is that, in our experience, every case is different - in crucial details at most. Each claim requires a separate examination, an examination that we cannot carry out when enforcing many similar (but not identical!) claims.
[1] Most recently OGH 24.04.2019, 7 Ob 49/19k.
[2] Epidemic Act 1950, Federal Law Gazette 186/1950 as amended I 23/2020.
[3] Federal Act on Provisional Measures to Prevent the Spread of COVID-19 (COVID-19 Measures Act), Federal Law Gazette I No. 12/2020.
[4] OGH 7 Ob 49/19k: “In the absence of a corresponding agreement, the compensation amount in such cases is therefore based on the contribution margin not actually generated.”