What We as Restaurant Leaders Need to Help Survive COVID-19

What We Can Do As Restaurant Owners

 Hole in the Wall Hospitality          

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3/18/2020 3:00 pm Gov. Pritzker announced new website

coronavirus.illinois.gov

for up to date information

BE PROACTIVE, DO NOT WAIT FOR WASHINGTON OR SPRINGFIELD TO ACT !!!

Do not leave your people stranded without constant updates, even if those updates are to tell them that there are no updates. It is your show, you are the leader and must be the leader with confidence and convene that no matter what, as a team we will survive this storm. Take action to demonstrate you are cutting costs other than payroll, i.e. turn off all unnecessary lights, adjust thermostats, allow staff to take home perishables that otherwise would be wasted. Prepare large family meals that can be taken home.

CALL YOUR LAWYER Review your insurance contracts, loan agreements, leases and other contracts to determine your rights and obligations and how they might be affected by this unprecedented event.

CALL YOUR BANK OR LANDLORD and see what kind of terms can be reached. Banks and landlords do not want empty spaces or foreclosures and they do want to work with those who want to work with them!

CALL YOUR INSURANCE BROKER and ask about the information in the attached article from the INSURANCE JOURNAL

FORCE MAJEURE CLAUSES, which are fairly common but rarely discussed can be a valuable resource. This translates literally to “SUPERIOR FORCE”, these clauses DEAL WITH CIRCUMSTANCES THAT ARE BEYOND THE CONTROL OF THE PARTIES. War, natural disaster, labor strife, and after 9/11 terrorist attacks are examples of circumstances included in these clauses.

CALL YOUR ACCOUNTANT OR BOOKKEEPER Create a payment structure with your billers so that they can still be paid, and you will stay in business.

It is important at this time to review your contracts to determine what rights you may have in the days, weeks, and months ahead.

REACH OUT TO YOUR PURVEYORS and ask them what they are doing to help, ANYTHING IS BETTER THAN NOTHING! Without you they don’t exist.

BLOW UP YOUR SOCIAL MEDIA let people know what you are doing to help them, help your staff, and stay in business so that you can keep serving them in the future. LOTS OF CURRENT PICTURES OF HAPPY FACES CLEANING EVERYTHING IN YOUR RESTAURANT. STAY POSITIVE!!!

Insurance Coverage for Losses Stemming from the Coronavirus

By Pamela D. Hans and Marshall Gilinsky | February 26, 2020

The coronavirus has not only sickened tens of thousands of people, killed several hundred, and disrupted life for millions, but has also sharply impacted the second-largest economy in the world. Many Chinese companies have suspended operations, and international companies like Starbucks, Apple, McDonald’s, KFC, and Pizza Hut have closed their stores in Wuhan and elsewhere. Disney has closed its parks in Shanghai and Hong Kong. Luxury brands have seen their stocks fall. Tesla and other companies have suspended operations. Companies that do not have operations in the geographic areas that are most acutely affected by the outbreak but depend on businesses in those areas as part of their supply chain are also impacted.

Businesses should evaluate whether and how their operations and revenue may be affected by the coronavirus and then closely analyze whether existing insurance policies potentially provide coverage for the losses.

Business Interruption & Contingent Business Interruption Coverage

Standard property insurance policies usually include two types of valuable coverage for disruptions like the coronavirus. Business interruption coverage insures against losses resulting when the policyholder’s operations are directly affected; and contingent business interruption coverage insures against the risk of indirect losses, such as when suppliers or customers are affected.

Policyholders may be questioning whether their property insurance policies have been triggered if there has not been physical damage to their property as a consequence of the coronavirus.

Coverage for business interruption losses may exist even if there is not physical loss or damage to covered property.

In most property insurance policies, business interruption coverage is triggered when the property at issue suffers “direct physical loss or damage.” Structural damage to the property, however, is not a requirement for coverage; proof that contamination or other relatively intangible conditions like bacteria, gases, and fumes that “rendered the insured property temporarily or permanently unusable or uninhabitable may support a finding that the loss was a physical loss to the insured property.” Mellin v. Northern Sec. Ins. Co., 115 A.3d 799, 805 (N.H. 2015); see also Gregory Packaging, Inc. v. Travelers Prop. Cas. Co. of Am., 2014 U.S. Dist. LEXIS 165232, at *15-17 (D.N.J. Nov. 25, 2014) (“courts considering non-structural property damage claims have found that buildings rendered uninhabitable by dangerous gases or bacteria suffered direct physical loss or damage”).

Additionally, many insurance policies include civil authority coverage, which covers losses that occur when government authorities restrict access to the area where a business is located or that the business depends on for its operations.

Many property insurance policies also provide contingent business interruption coverage, triggered by damage to or disruption of a business’s suppliers, customers, or other key partners. While the policyholder itself need not be physically damaged, it does need to have coverage for the type of damage that affected its suppliers, business partners, or customers.

Commercial General Liability, Directors & Officers, and Errors & Omissions Coverage

While business interruption claims may, at first blush, seem the most likely to follow from the coronavirus outbreak, depending upon the claims that are asserted, insurance coverage may exist under commercial general liability, D&O (Directors and Officers), and E&O (Errors and Omissions) insurance coverage. Commercial general liability insurance coverage provides a defense to claims asserted by third parties for bodily injury or property damage. With some companies experiencing a drop in share price, shareholder suits and others may follow. Those claims may trigger coverage under D&O and E&O insurance policies. People who are being quarantined on cruise ships or by other private entities might have claims about how they are being treated.

Workers Compensation

Workers compensation insurance policies generally cover occupational diseases and injuries, i.e., those that: (1) are due to causes and conditions that are characteristic of and peculiar to a particular trade, occupation, or employment; and (2) are not an ordinary disease to which the general public is equally exposed outside of employment.

There are, however, instances in which “ordinary diseases” may be covered if it is possible to establish a direct connection between the workplace and the circumstances through which the disease was contracted. For example, if an illness is triggered by an event at the workplace and directly flows from the work that is being performed, it may be argued that the resulting disease has been the result of an accident causing bodily injury. The coronavirus is spread by respiratory droplets and is so highly contagious that health care workers are wearing full hazmat suits while treating those infected. Accordingly, if it is determined that an employee contracted the virus at work, it is quite likely that workers compensation insurance would respond to the injury. Of course, in such a situation, the business’s primary concern would be protection of its employees and the public from any other contraction of the disease, with insurance issues to be resolved in due course.

It is important for policyholders to consider all potentially applicable insurance policies when evaluating coverage for coronavirus- related claims and losses. Consulting with an insurance broker and trusted insurance experts can put policyholders in the strongest position to maximize their insurance recovery in the event of a loss or claim resulting from the coronavirus.

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Our recommendation is that if you have not already developed a Business Continuity Plan (BCP) you do so now. As part of your pandemic planning process we recommend you to:

·        Identify core services, and what is needed to maintain your supply chain

·        Identify staffing arrangements, such as succession planning and cross-skilling

·        Protect the health of your staff

·        Develop a communications strategy for employees, customers and suppliers

·        Consider financial implications, such as cash flow, cost increases and insurance

·        Identify contingency plans for the unexpected

·        Schedule how the plan will be tested and updated

·        Understand your regulatory and reporting compliance requirements

You should identify, mitigate, and monitor risks and escalate issues at your restaurant, here are some recommended actions as you build or review your BCP.

·        Maintain a checklist identifying where your restaurant may have gaps and what best practice items should be included as part of your program.

·        Risk management planning for a pandemic involves identifying risks, assessing the impact of risks and developing strategies to manage risks to your business.

·        Make sure government and public resource contacts are available for each of your restaurants for compliance and assistance.

·        Have a communication plan available to your employees outlining policies and specific steps of what will happen in different scenarios and how to access your information. We’re here to help if you need it.

·        Create a centralized incident log for issues and events. If possible, create categorization and routing to make risk management easier.

We advise everyone to scrutinize their policies to find out what will govern coverage in the event of a business interruption loss. Every insurer, insured and insurance policy is different. In order to pay out recovery costs, insurers would need to establish a fact pattern that supports a claim. Work with your broker to understand your policy and see whether coverage might apply.

And always follow precautions to keep employees safe by staying up to date on recommended preventative measures.