Operating your business during COVID-19

The COVID-19 pandemic has resulted in unprecedented governmental action, affecting every sector of society. Among this government action is Governor Murphy’s Executive Orders 104, 107 and 122, which mandates a “stay in place” regime, and permits only “essential” businesses to remain open. As the pandemic has progressed, the frequency and number of edicts can be confusing, and those affected may unwittingly operate in violation of these new policies. Whether intended or not, a violation of an executive order is a violation of law, which in turn can lead to devastating, unanticipated consequences – such as learning, at the worst possible time, that your insurance carrier is denying coverage for claims made during this emergency.

Many insurance policies, whether they be commercial general liability, employment practices liability, commercial auto liability, professional liability, product liability or business interruption coverage, contain exclusions for claims made when the insured was operating in violation of law. As noted, Executive Orders 104, 107, and 122 permit only essential businesses to operate. Violations of these Orders are punishable with up to 6 months in jail and $1,000 in fines. As the succession of Executive Orders shows, the definition of “essential business” has been changed several times over the course of a few weeks. If you are operating a business in violation of these Executive Orders, and a claim is made against you, you may be left without insurance coverage to defend and satisfy that claim as a consequence of the violations of law exclusion.

Essential Businesses Permitted to Operate

Currently, essential retail businesses allowed to remain open to the public are:

• Grocery stores, farmer’s markets and farms that sell directly to customers, and other food stores, including retailers that offer a varied assortment of foods comparable to what exists at a grocery store;
• Pharmacies and medical marijuana dispensaries;
• Medical supply stores;
• Gas stations;
• Convenience stores;
• Ancillary stores within healthcare facilities;
• Hardware and home improvement stores;
• Banks and other financial institutions;
• Laundromats and dry-cleaning services;
• Stores that principally sell supplies for children under five years;
• Pet stores;
• Liquor stores;
• Car dealerships, but only for auto maintenance and repair, to deliver online purchases directly to    customers, or to arrange for curbside pickup;
• Printing and office supply shops;
• Mail and delivery stores;
• Bars and restaurants for drive-through, delivery, and takeout only;
• Mobile phone retail and repair shops;
• Bicycle shops, but only to provide service and repair;
• Livestock feed stores;
• Nurseries and garden centers;
• Farming equipment stores;
• Child care centers, but only if they certified that they will only serve children of essential workers starting April 1;
• Realtors, but only to show houses 1-on-1 (open houses are prohibited);
• Firearms retailers, by appointment only and during limited hours;
• Microbreweries or brewpubs for home delivery only.

Essential Construction Projects Permitted to Continue

The rules governing construction have likewise been revised over the past few weeks. Currently,
if your business is conducting construction deemed “essential”, that construction may continue. These construction projects are:

• Projects for health care, including hospitals and health care facilities;
• Transportation projects, including roads, bridges, and physical infrastructure;
• Utility projects;
• Residential projects that are exclusively affordable housing;
• Projects involving K-12 schools in Schools Development Authority districts and higher education facilities;
• Projects already underway at a single-family home with a construction crew of 5 or fewer;
• Projects already underway involving a residential unit which a tenant or buyer has legally agreed to occupy by a certain date, if construction is necessary for the unit’s availability;
• Projects involving the manufacture, distribution, storage, or servicing of products sold by essential retail businesses;
• Data centers or facilities critical to a business’s ability to function;
• Projects for the delivery of essential social services, including homeless shelters;
• Projects supporting law enforcement or first responders;
• Projects ordered by Federal or State government.
• Any work to secure and protect a non-essential construction project for its suspension;
• Any emergency repairs necessary for the health and safety of residents.

All other construction projects must cease, effective Friday, April 10, 2020, at 8 p.m.

Businesses have had to make significant adjustments over the past weeks. Although we are all doing our part to flatten the curve, it is easy to see how unwitting violations of these Executive Orders can occur. If you do operate your business in violation of these Executive Orders and a claim is made against you, your insurer could disclaim coverage, resulting in catastrophic loss to you. Accordingly, if you plan to operate your business while these Executive Orders are in effect, reviewing, understanding, and complying with these Orders is strongly encouraged, and we are available to assist you to ensure you are operating in compliance with the law, and to review with you and your risk management professionals the boundaries to your existing coverage.

Please contact me if you have any questions about this blog.