Posted April 13, 2020
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:
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:
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.
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