Practical Business and Insurance Considerations for Hotels and Restaurants during the Covid-19 Crisis

MIAMI, FL / ACCESSWIRE / March 30, 2020 / COVID-19 has thrown our way of living into treacherous and unchartered waters. With each passing day, the scare of this novel virus is causing government officials at every level to react with decisions that effectively strip our ability to work, shop, play and interact normally in order to slow or prevent the spread of this viral outbreak.

This ripple effect includes the requirement of closing restaurants, creating an absent and fearful workforce with obligations for their employees’ compensation, disruption of supply chains, cancellations of reservations and bookings.

Restaurants and hotels are undoubtedly stressed to find ways to manage decreased cash flows and stop the bleeding losses to recoup or minimize the damage for their losses of income, assets, and brand value during and in the aftermath of this unforeseen ‘tragedy.’

Business interruption insurance is an extremely important type of coverage in an insurance policy which is intended to cover for lost income sustained as a result of a covered peril in order to allow for the continuity of your business into the future.

Often, specific exclusion language exists in a policy that makes the case seem completely defeated and untenable. Insurance companies will continue to seek an escape from their contractual obligations, but there are creative legal strategies that can help navigate the treacherous waters of these obstructive defenses.

Civil Authority coverage, for instance, applies when a local, state, or federal government mandates to limit access to any aspect of your business which is critical to a business owner’s ability to conduct his normal operations.

Contingent Business Interruption Insurance is when the loss is indirect as caused, for instance, by the inability of a supplier to perform his obligations with the Insured (business owner) due to no fault of his own and is considered covered by the business owner’s insurance policy.

Under the contract doctrines of Impossibility of Performance and Frustration of Purpose, a party is discharged from performing a contractual obligation due to no fault of their own, if it is impossible or futile to perform, the party could neither have foreseen the risk at the time of entering into the contract, or could they have prevented the event(s) in question from occurring in the first place.

Force Majeure is a defense to contractual obligations to perform and arises when parties cannot reasonably foresee nor control an event, which prevents either party to perform their contractual obligations. An Act of God may be considered as force majeure; it refers to a natural phenomenon that is exceptional, inevitable, and irresistible, and which its effects could not be prevented or avoided by the exercise of due care.

These and other legal doctrines provide legal defenses for business owners not to have to continue to perform their contractual obligations.


Zarco Einhorn Salkowski & Brito, P.A. is a leading business transaction and litigation law firm. Located in Miami, our attorneys serve clients in Florida, throughout the United States and internationally. Our attorneys include former economists, bankers and accountants who are able to look beyond your legal issues to craft solutions that are practical, expeditious, and highly beneficial to your company. We are recognized as one of the top franchise law firms in the United States, and we are repeatedly awarded a “Best Law Firms” ranking in U. S. News & World Report. Our firm’s senior partners, Robert Zarco, Robert Einhorn, Robert Salkowski and Alejandro Brito are repeatedly awarded as “Super Lawyers” and “Best Lawyers” for many years. We handle all aspects of franchise, licensing and distribution law, as well as complex commercial and insurance disputes and transactions.

Robert Zarco, Esq.
Zarco, Einhorn, Salkowski & Brito, P.A.,
Attorneys at Law

SOURCE: Zarco, Einhorn, Salkowski & Brito, P.A

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