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FULL TRANSCRIPT:

Roy: …to you that we’re able to do this. For those who are uninitiated, this is an interactive process. We ask you to ask questions. We ask you to participate. And where you think I’m wrong, call me out because that’s the only way we’re gonna be able to get through this together. This week, we’re gonna be talking about are you covered by insurance during COVID-19? And as usual, we’re gonna be briefly talking about the… Next page, please. We’re gonna be talking about the weekly economic update. We’re gonna be doing the pandemic update, and we’re gonna be talking about insurance coverage during the update. And we have a guest with us today, who I’ll be introducing shortly who is an expert in the insurance business. Particularly, Oppenheim Law was founded in 1989. We’ve been serving South Florida for 30 years, as well as our title company, Weston Title. And we have gone through an economic crisis like this just 12 years ago. And we had no idea that we’d be basically going through something that was much more complicated and intricate than what we thought was insanity just back in 2008. And again, we hope that these skills that we picked up then and the experiences will help us all get through this together this time around. I wanna, of course, first of all, introduce Ryan Collins, our guest speaker. Ryan is the owner of Brightway Insurance of Sunrise, Florida and of Chatham, New Jersey. Ryan has 20 years of experience in Florida in the insurance industry, and he’s been licensed in Florida for 20 years, and he has a 220 brokerage license.

I’ve known Ryan for several years, as is Ellen, my wife and partner, who joins me in this process every week as well as Paula who always assists us. And, of course, Geoff, my partner, and Mia, our senior associate, all of whom are very integral in putting these meetings and webinars together. Last week, we talked about the guidelines and procedures to safely reopen in the Tri-County area in Florida and how to reduce civil liability. This week we’re gonna discuss how insurance can, in theory, help you get through this process and what to expect from the insurance industry. Next page. We’re gonna do a weekly economic update, which I wanna go through real quickly right now. What we’re finding is that people are obviously still driving a lot more, gas stations are being used a lot more. Cafes, outdoors, people are using, but at the same time, people are traveling less on airplanes, and our consumption is continuing to evolve and change as this process continues. For example, in Dade, and soon in Broward County, once again, indoor dining will not be allowed. Most health clubs are being closed down in Dade County, and Broward is going to announce something quite similar. At the same very moment in time, we also have an announcement from the governor, that schools are going to try and reopen in-person, and we’re gonna see how that’s gonna work with the state being, literally, one of the number one hotspots, not just in the country but in the world right now.

But the idea is to try and get students somehow back into some sort of normalized environment. How that’s gonna happen, how they’re gonna protect teachers, as well as students and make sure that schools don’t become some super spreader environment is something that we are all gonna have to see. But if we go through the numbers, it’ll be very interesting. In terms of vacation spending, what we’re finding particularly is that Airbnb is doing quite well. Rental cars, people are using rented cars to drive instead of fly. Hotels are coming back, but there’s a dramatic decrease from where we were just in February, previously. And airlines, of course, while they’re slightly coming back are still well below where they were. And a major airline, El Al Airlines, that is a sovereign airline of the State of Israel announced that they have furloughed everyone as of this morning and they are no longer flying for the time being. And I’m sure we will continue to hear other airlines that will not be able to survive or at least will not be flying during this period of time. Next slide. Foot traffic is very interesting. When we look at foot traffic, we see that in certain states, traffic is coming back and particularly places like in New York or other places where people typically are walking. In Florida, of course, it’s not gonna come back as much because people don’t walk as much, to begin with. But we are seeing that people are getting out more and that is a positive, positive sign. Next page.

Bare necessities, gas station is off the charts. We’re seeing people are coming back to malls, slightly car dealers are coming back. And then all people are still at around 20% or 30%, about 20% below where they were prior to this crisis. Supermarkets are no longer the main source of food. The cooking trend may be coming to an end. Food delivery has almost doubled and has remained at that level. Online groceries has dropped because people are probably sick and tired of eating at home and cooking. Meal kits are remaining quite high. Fast food is basically where it was before the crisis. Supermarkets have gone up but then I think have come down a little bit, and the restaurants have come back primarily because of takeout and those restaurants that were briefly able to offer sit down in-room dining. But the in-room dining is a major, major concern as is any indoor kind of air conditioning. One of the theories that we’re seeing here is that while the south is taking the hit right now, the question is why and the answer is because we’re indoors. What is special about indoors? The answer is obviously air conditioning. What is special about air conditioning? It’s probably, and some people are suggesting that it could be a little bit like a Legionnaires disease that it is through the air conditioning systems and the HVAC systems that are both used up north during the winter and in the south during the summer, are spreading the virus more than anything. And what’s really interesting, if we look at other countries like Europe, why are they doing particularly well?

People are saying, “Well, because they’re wearing face masks. That may be it but it may also be that many of these countries do not have central air conditioning systems. And because of that, their windows are open more and they have a much more ventilated indoor environment. We have very sealed environments. Restaurants are like that, cruise ships are like that, nursing homes are like that, airplanes are like that, where you have these sealed environments that are using circulated central air. And with the new studies coming out that the virus is aerosol and that it is airborne, we need to be focusing very carefully about our indoor environments. And that’s why Dade County, in fact, is closing their restaurants indoors. And it’s gonna be very interesting to see how we can ventilate our school systems if we’re really gonna reopen the schools. So it’s gonna be very interesting to see how that works. Next page. So pandemic update, Florida virus, 200,000 cases, 3,000 deaths. So if we look at it, the death rate is dropping. We’re at about 1.5%. It looks like if, in fact, the death rate remains what it is and that the number of cases continue to rise, particularly, with those people that are young, average age in Florida is 21 years old, the reality is that death rate will continue to drop and we’ll probably end up in 1.5% to 1% rate. We also have new mitigating ways to deal with the disease. There have been some people who probably wouldn’t have passed away. In April, a famous Broadway star who passed away, likely is that had he gotten COVID today, he probably would have been fine. He had no pre-existing conditions but the medical community didn’t know what worked and how to deal with it. Next page. What does it say here? We’re doing very well. Well, the virus is continuing to spread and, you know, as we indicated it’s airborne, and so office spaces as we talked about, restaurants, all these things are gonna be big issues, especially with school possibly reopening up. Next page. What everyone really wants is Ryan Collins from Brightway. Ryan, are you there, buddy? Can we get you on?

Ryan: Yes, I’m here. Can you hear me?

Roy: Yes, yes, yes. Hopefully, I didn’t waste anyone’s time going through the intro here. But let’s go on and talk about how insurance is going to get us through this, what we can expect, what we can’t expect, and how it’s affecting your business, in general.

Ryan: Yeah, certainly. So I will talk about a couple of different things today. One of them is everybody’s got the question on business interruption insurance and how COVID has impacted that, and what people’s coverages look like during the COVID crisis with business interruption insurance. In addition, we’ll talk about general liability. A huge piece is rate increases. So not only are we facing unprecedented economic times, but what are the insurance companies doing during this time? And we’ll talk a little bit about that, as well as some of the underlying trends that aren’t COVID related when it comes to homeowners insurance. And then finally, we’ll talk about the new flood maps associated with FEMA. And they’ve redrawn the flood maps and we’ll talk briefly about that. So next slide. Great. So there’s a huge question right now about business interruption insurance. And business interruption insurance is just that, it’s insurance for if your business is interrupted for any particular reason. Obviously, it’s full of exclusions, things that it does not cover for, but it’s there to really make up for the loss in revenue during the time that you are down. And so I used an example here of an actual real-life specific example from Tampa. There’s a company up there called Counter Culture that’s a restaurant and they actually have been pushing to get covered for the shutdown that they’ve been facing. And they had two things happen. One was that during the pandemic, they actually had some kitchen workers get sick from COVID and they closed, result of that.

But then they were also remained closed because of the mandated pieces by the government. And so there’s a question at play here. Most business interruption policies do not cover viruses and bacteria. They’re clearly excluded. I haven’t come across a policy that we’ve written yet where they’ve been included in terms of coverage. So they’re specifically excluded. However, the way that Counter Culture has been playing it from a litigation perspective, is actually that it’s not the COVID that has closed them down, but it is the government that has closed them down. And so that’s been the approach. It’s hotly litigated right now. It’s really tightly contested. Honestly, you see, the approach from both sides. And so really, what it comes down to is it’s possible that the coverage could exist from the government intervention, but there’s obviously no valid argument for the time it was shut down due to the employees contracting COVID. So just… Yeah, go ahead.

Roy: What I wanna say is, you know, people are seeing a lot of ads on Facebook for lawyers trolling for clients to bring business interruption lawsuits. Now there are different policies that state different things. Not all of them have exclusions for viruses, but a lot of them, like, say that the business interruption has to be through a physical manifestation, through some sort of physical event, sort of like a fire, a flood, a hurricane. And so the question is, and while there are exceptions for bacterial items, such as mold, many did not in the old case…in the old policy specifically exclude viruses. So in those cases, the question is, is there a physicality component of the virus? Can you say that, even though you can’t see it, it’s still, in fact, physical? I mean, just because it’s a micron, that doesn’t make it non-physical. It just means we can’t see it. So the question is, how are the courts and judges going to evaluate what the event has to be for there to be a physical event to define a casualty?

Ryan: Yeah, you’re absolutely right. And so right now, if you go Google business interruption in COVID, the first thing will be a bunch of ads at the top for attorneys because, again, it is hotly litigated right now. It’ll be interesting to see how this plays out. But if you do have questions on your business interruption insurance, take a look at your policy and look for any exclusions that you might have on virus and bacteria. If you can’t find any exclusions, you might have just a completely clear path to getting that coverage.

Roy: But let me assure everyone right now that if you’re up for renewal, and you will be starting anytime every month, you know, 10%, 12% of every policy is renewed, by the end of the year, there will not be a new policy that is issued that doesn’t have the term virus pandemic as an exclusion. And that’s always been my beef and don’t take this personally, Ryan, is that whenever you get insurance, you’re always being insured for something that doesn’t include the peril that is going to occur. So even, for example, some of the destruction that occurred in major cities due to the social unrest, in some cases, you know, if it’s considered a riot, it’s okay. But if it’s social insurrection, it’s not okay. You know? And so, you know, it’s really interesting how the insurance industry always tries to not pay when you pay these policies. And it’s the same thing that when they do pay, they’re gonna cut you off anyway. And so it’s always like heads, I lose, tails, you win, you know. And when you get to flood and water damage, it’s gonna be a perfect example of what I’m talking about. At some point the question is why don’t you just go bear and stick the money in the bank for 10 years, and you’d be at the same place?

Ryan: Right. Yeah. For those people that have the ability to do it, self-insuring is a great option in today’s market. So, next slide. All right, great. So then the other really piece to this puzzle is we talked about the benefit that you might be able to obtain as a business owner because of the COVID crisis. However, there’s the third-party element of general liability in COVID. And, you know, Roy talked about it best, you know, there’s some inherent liability to opening your business in today’s world. And everybody just should be aware of what their policy allows and what it doesn’t allow. And so, some policies have communicable disease exclusions right off the bat. So you wanna check your policy to see if you’re in something that prohibits it altogether. And some insurers are also relying on organic pathogen exclusions. So this is…like a great example is mold. But sometimes they have very broad definitions, like microbes. And there’s even, like, a scientific kind of conflict today about the definition of a virus as a microbe or not as a microbe. So, it’s really kind of… You’re gonna be able to find a witness on either side or an expert on either side that’s going to be able to be your smoking gun in a lawsuit, but you don’t wanna have to be there. And so check your policy to see what the wording looks like around that. There’s obviously pollutant exclusions that exist that the insurance companies are gonna use in defense. And then obviously, there’s a huge part which is an expected intended exclusion, right? That is if a business owner could have foreseen that this was going to occur, and could have done something to prevent it, the insurance company is going to look to deny that claim.

So this is where you as a business owner, or if you know a business owner, just make sure that they’re doing everything that they can to try to get in front of these types of exclusions in the case that something does come up. And these pictures are actually good examples of what some businesses are doing to get in front of that issue. You know, making sure that everybody has social distancing spacing and making sure that there’s not an issue with kind of putting people in a position where they can get sick. So I would just say if you own a business, whether it’s a gym, a health club, health care, restaurant, check for exclusions, take your precautions. So not directly part of the COVID piece here but certainly a part of what’s happening in the world today is that, especially in Florida, insurance rates are going through the roof. These articles right here are all from this year. It’s basically… Again, you can Google it. Florida home insurance rate increases and you’re gonna see it everywhere. Rate hikes are happening across the board. We’re seeing rate hikes as much as 60%. Certainly 20% to 30% is probably a conservative average. A lot of this is driven by Irma, believe it or not. The statute of limitations on Irma damage comes up this September. So what you’re seeing is there’s a push to try to get those losses in. And that means that it’s going to increase claims frequency. And then subsequently, there’s a ton of litigation that’s happening right now, litigation from every source, whether it be water damage, whether it be, you know, liability claims like slip and falls, there’s a lot of litigation. You see, in a later slide, I’ll actually talk about how there’s been basically, twofold increase, three-fold increase, really in litigation over the course of the last 5, 10 years across the market.

And so when that’s all happening, what happens is insurance companies are finding it hard to make money. And I know that sounds crazy. I mean, everybody thinks the insurance companies are making money hand over fist but, in fact, we had three carriers go out of business this year in Florida. That’s the most I’ve ever seen in a single year go insolvent. And so when that happens, it becomes a hard market. And it tightens underwriting guidelines, people pull out of venues. And because of that, you’re left with kind of an unhappy monopoly, right, where Citizens is maybe the only player in town or maybe there’s one or two. It just makes for very difficult conditions. To make matters worse, because we’re mostly domestic in terms of Florida carriers, meaning that they’re all out of home-raised here from Florida and they’re small to moderate-sized carriers, they are not offering discounts, credits or forgiveness for financial hardships that are related to COVID. So, if you’re already having financial difficulty because of the situation with COVID or you know people that are, they shouldn’t expect their insurance company is going to help them. In addition to that, they can probably expect that rates will increase at the time of their renewal, kind of putting salt in the wound. Very difficult situation we’re in right now with the rates here in Florida.

Roy: Very interesting. Let’s move on. We have some questions, but I think we’re having trouble pulling up the question. So we’ll keep going until we’re able to.

Ryan: No problem. I’ll be… Yeah.

Roy: We got one. Do any business insurance policies cover pathogens?

Ryan: Yeah, certainly, there’s wording in every policy. You can basically find policies out there that do cover it. I’ll tell you now that Scottsdale, who’s a large carrier absolutely does not cover it. And that’s pretty well-known at this point. And, you know, like I said, Travelers does have versions of it that do include it. It just is carrier to carrier and depending on what kind of business you’re in.

Roy: Right. And also if you do get government benefits, wouldn’t that be deducted from your business interruption insurance because…

Ryan: Absolutely .

Roy: …that is a collateral source that you’ve received funds from, which you’d have to deduct from what your damages are when you do the math?

Ryan: Yes, absolutely. You basically have to submit your books before and after and be able to show the loss.

Roy: Right. So if you don’t even have a loss because of the PPP or the EIDL, or whatever else is out there, you may not even have a claim, even if you are covered?

Ryan: Right.

Ryan: One more question, Ryan. Do you think that waivers are the best way to protect businesses if insurance does not cover or even if insurance does cover, does that show you that at least, you know, you tried to mitigate the damage from a liability perspective?

Ryan: Yeah, I’m definitely not a contract attorney, or a liability…or an attorney at all. I don’t play attorney on TV. But I will tell you that having a waiver does not hurt your case. Certainly, if anything, it’s that extra layer of protection, I think is necessary in today’s world.

Roy: Right. Let me move on to assignment of benefits, which I know you want to talk about.

Ryan: Again, I’ll be super brief on this. Basically, huge increase in the number of litigated suits between 2013 to 2018. You’re looking at 27,000 litigated cases in 2013 to 89,000 in 2018. It’s a plaintiffs’ market right now. And it has been. That’s the way that the policies have been set up. And unfortunately, every loophole is being kind of beaten on right now. And you can see that the water damage claims have been a huge part of that. So the insurance company’s in a position where they can’t seemingly win. They haven’t found a way to win right now in the water damage piece. So instead, what they’re doing, they’re removing it altogether from your policy or creating a sub-limit, where there’s only $10,000 of potential coverage for you there. So that’s a big piece to be aware of because a lot of carriers, a lot of them are doing that action at renewal, which means that you already have a policy, perhaps you had full water damage coverage, check your renewal paperwork because it’s typically, yeah, that’s where you see the endorsement, where it’s changed, reduced or removed. So check your paperwork there. I can tell you, offhand, I had two policies, my own policies were that water damage, both business and personal were water damage was removed altogether from the policy.

Roy: So I mean, when that happens, you might as well just increase your deductible because at that point, the only thing you’re really insuring for is a catastrophic fire or your roof being ripped off during a hurricane. I mean, you’re not insuring for some of the small or mid-size type claims that seems to be pecking the insurance companies to death here.

Ryan: Yeah, right. Exactly right. You’re gonna continue to see that. You’re gonna continue to see where insurance companies remove coverages. And as long as the state allows it, that’s what they’re going to do because they’re trying to get control of the market right now.

Roy: Right. It’s very interesting. Of course, assignment of benefits, I think there has been some new legislation to try and limit that, but that’s where the lawyers and the contractors assign the benefit from the homeowner to themselves so they can then get paid for all the work that they’ve done on the house. And then they bring in, I guess, an appraiser who assesses the damage and, of course, the damage then gets trumped up legitimately or otherwise. And the claim gets enriched at the end of the day.

Ryan: Right. Yeah. And then the last piece here is just to be aware, flood maps. The FEMA floodplains are all being redrawn right now. Actually, the redraw has really been complete. They started last year and they really started releasing them in January, February of this year. Broward even had some kind of town hall meetings to discuss the changes. And in terms of, like, what you can expect, Weston, the Weston area is really untouched. It remains X Zone for the most part, which is not a floodplain. Yeah, this chance of 100-year storm is, like, less than than 1%. However, if you’re east of 95, it’s basically all a floodplain now at this point. And be prepared for not only paying for flood insurance but having those rates actually go up from what they are today. So even if you have active flood coverage, in all likelihood the rates will go up. And that’s just simply because FEMA was, you would say, under reserved for the amount of risk they had taken on. One of the things that I was just sharing with Roy earlier today was that Cape Coral is the most at-risk city in the country in terms of a flood risk. They have 90,000 homes that are currently uninsured or underinsured from where they’re located and their risk of 100-year flood. So that’s just, you know, obviously on the other side of Alligator Alley, but we have a lot of those risks here in Florida as we stick out…you know, the peninsula goes out into this…into the ocean. So here’s where it’s likely going to change .

Roy: Ryan, quick question. What’s the maximum coverage for flood insurance? Isn’t there a cap on it anyway?

Ryan: Yeah, it’s $250,000 for the NFIP plan and $100,000 for personal property contents coverage. So that’s the most you can get. You can also get excess flood if you want. However, the $250,000 is usually adequate, depending on the size of the home.

Roy: So if you live in a condo, for example, and you’re on a high floor, while you may have exposure to wind, you really don’t have flood damage other than it coming from your own utilities or from maybe something happening in the building itself.

Ryan: Yeah, your association in a condo has flood coverage 9 times out of 10, and that covers the exterior walls and the primary construction. And so, you know, typically, if you’re in a condo, you don’t typically buy flood insurance. You can always buy it, you know, if you’re not required to, but they usually have it.

Roy: We have a few more questions I wanna get to if we can because we only have a few seconds left. Has force majeure been used successfully yet, in general, as an argument is the question, in terms of insurance, business interruption, primarily, I would think?

Ryan: Yeah, I have…we haven’t crossed it down here. I can tell you up north, New York, New Jersey, it’s incredibly hot on this right now. Matter of fact, in Times Square, they ran an ad on one of the billboards for I think a week straight basically blowing up insurance companies. So I can tell you now that this is going to be something that’s developing. We’re gonna find out a lot more as courts resume and as things hit the docket.

Roy: One of the things some of my insurance friends are telling me is that in the past, Congress sometimes steps in and literally rewrites the policies, provides a chunk of money to the insurance industry as a form of bailout, and then that money comes back to the homeowner. And it’s a way of almost distributing money into the community to keep the economy robust. It’s just like, you know, the way that PPP work for small businesses and how the airlines got money, that money could go to the insurance industry and they have to take it with the proviso that they then have to acknowledge the business interruption claims. And so you may… Are you seeing that?

Ryan: Yeah, you’re gonna see that.

Roy: Right.

Ryan: You’re definitely gonna see that. And it’s state to state. That’s the thing because insurance, it’s all individual and specific to each state, right? There’s not a federal governing body. So you’re gonna see states, California is a great example, where they’ve already made steps to retroactively rewrite some of the policies to provide business interruption insurance. And then you’re gonna have states that do not take that action, maybe states that are less small business-friendly, and more large business-friendly, you know, that you’re gonna see differences in states based on their politics.

Roy: I was gonna mention California already has done that. So I’m thinking that maybe there could be a national platform just based on what the example in California.

Ryan: Yeah.

Roy: There is one more question here. I wanna talk a little bit about maybe umbrella insurance coverage for people. But is there any other supplemental insurance that you could recommend to homeowners, you know, that maybe they’re not thinking about?

Ryan: Sometimes your company offers service line coverage. Service line coverage basically covers the service from the main utility to your home. Homeowners insurance covers the service within your house, your electrical box, the main drain inside your home, but it does not cover the pipes that go from the main service line to your home. So that is something that’s typically not covered by either the utility company, nor by your personal homeowner’s policy. So that is something to look into if you’re ever looking to make sure you’re adequately insured, see if you can get that service line covered. That’s a huge one.

Roy: You know, we’re running out of time, Ryan, and, you know, you’ve been phenomenal. And you could go on for hours with me and we could keep talking. Ryan Collins is from Brightway Insurance. He has an office in New Jersey and an office down here in Sunrise. And, of course, Oppenheim Law and Weston Title, you all know who we are by now. But we’ve been doing this 30 years and we’re gonna continue to be doing this to assist our neighbors, our friends, our family, our community, small businesses, medium-sized businesses, get through this crisis and figure out how we’re gonna get through this. And it’s not gonna end tomorrow. There is light at the end of the tunnel but all we have to do is remain confident and resilient. And I’m sure we’re all gonna come out of this stronger and better, and have great stories for our grandchildren one day. So Roy Oppenheim, Oppenheim Law, Zoom at Noon. See you next week. And, again, thanks again, Ryan. Have a great weekend.

Ryan: Have a good one.

Roy: Thank you.