I hope you and your families are well.
The last couple of weeks have turned our normal upside down and literally wreaked havoc on virtually every part of the economy and your business. Below are a four “things to think about”, during these crazy times.
Consider Business Interruption Insurance
- Business interruption coverage is triggered when the policyholder sustains “direct physical loss of or damage to” covered property for certain causes of loss.
- The “physical loss” or damage does not necessarily require that a physical alteration to the property occurred. Courts have interpreted physical loss to mean property that has been rendered uninhabitable or businesses that have been rendered incapacitated by, for example asbestos, toxic gases, or bacteria. In the aftermath of the SARS epidemic, many insurers added “Virus or Bacteria” exclusions, which state that losses caused directly or indirectly by virus or bacterium are excluded from coverage. If your policy only excludes coverage for bacteria, you may still have coverage for the coronavirus.
- Many commercial property insurance policies provide “civil authority” coverage, wherein if a government agency prohibits access to the business’s premises, the resulting business losses may be covered. This clause usually requires that a covered cause of loss cause damage to another property within a certain distance from the insured business.
- Contact your insurance broker to see if you have coverage.
Preserve your Mechanic’s Lien, Payment Bond Claims, and Request for Equitable Adjustment Claims
Despite the COVID-19 Pandemic we are currently facing, statutory deadlines to preserve Mechanic’s Liens, Payment Bond Claims, and REA Claims remain in place. Be mindful to file your Mechanic’s Lien Notices, Suits to Enforce Mechanic’s Lien, Lis Pendens, Notice of Payment Bond and Suits to Enforce Payment Bond Claims within the designated statutory deadlines. Also, keep in mind, many federal contracts may include cost recovery for contractors’ costs associated with increased safety measures to protect their employees from COVID-19.
Force Majeure Notice
In the midst of the COVID-19 Pandemic many businesses have been forced to shut down, furlough employees, and are experiencing supply and material shortages and disruptions to labor. You need to be proactive and take precautionary measures to protect your business.
Most of your contracts will include Force Majeure or delay clauses that excuse or entitle you to additional time for conditions that are beyond your control. As is typical with most everything now a days, the delay or claim clause depends greatly on how your clause is written. Be mindful of our notice provisions. Please read each contract to confirm the notice language, where notices should be sent and specific claim, change order language necessary to preserve your claims. Despite the fact that we are all aware of the pandemic, you still have contractual obligation to fulfill and contractual notice provisions that you may be bound too.
Paycheck Protection Program – CARES Act
Congress amended the Small Business Act (the “SBA”) 7(a) loan program to include a new guaranteed, unsecured loan program (the “Paycheck Protection Program”) to help fund operational costs of eligible businesses, organizations and self-employed persons during the COVID-19 pandemic.
Qualifying Businesses include a business with up to 500 employees or which meet applicable size standard for industry. The CARES Act also includes eligible independent contractors and sole proprietors.
Beginning this past Sunday (March 26), loan request should now be made through your local bank. You can borrow 2.5 times your monthly payroll expenses (up to $10 million). Applicable uses for the loan proceeds include: i) qualified payroll costs; ii) rent; iii) utilities; and iv) interest on mortgage and other debt obligations. Loan forgiveness is available for funds used to pay 8 weeks of payroll and other qualified expenses.
Stay safe and healthy, and if you have any questions, please let me know.