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Could insurance bail on businesses that open early?

By Rich Miller
Contributing columnist
updated: 5/9/2020 1:20 PM

Gov. J.B. Pritzker has repeatedly said he's delegating enforcement of his stay at home order to local governments.

That stance has frustrated some folks who want him to get tougher with violators (although he'd undoubtedly risk making martyrs out of them if he did crack down). And the governor's position seems to have emboldened some local officials to defy the governor's order and open up their economies on their own.

But when local governments refuse to enforce his executive order, it appears that trial lawyers may step in and insurance companies might take a walk.

A growing number of southern and central Illinois sheriffs, state's attorneys and other officials have declared they won't enforce the stay at home order. The Jefferson County state's attorney has said he won't prosecute violators, as has the White County state's attorney. Johnson County's sheriff is one of several who've said he also wouldn't arrest anyone for violating the orders.

East Peoria's mayor has gone beyond even that, officially allowing the "opening" of several businesses in his city on May 1 that were ordered closed by the governor's EO, including hair salons, spas, gyms and indoor recreational facilities. On May 15, bars and restaurants are allowed to open at 50 percent capacity, churches and theaters can also reopen on that date.

But the Illinois Trial Lawyers Association has a message for renegade municipalities and businesses that open their doors: Watch out for lawsuits.

"The risk of opening early outweighs the benefit of limiting liability not only for the municipality but also for any employer who follows the guidelines of the municipality," said ITLA President Antonio Romanucci in a statement. "The prudent course would be to stay closed for another 25 days and limit any potential spread which could lead to litigation."

Those towns and businesses could find themselves without insurance coverage should something go wrong.

Kevin Martin, executive director of the Illinois Insurance Association, told me that insurance policies are "not going to cover intentional acts." In other words, if a business intentionally reopens in violation of the EO and somebody injures themselves there or contracts the virus, insurance coverage isn't a given. The same may go for municipalities which openly violate the EO.

The Illinois Department of Insurance adds that "if businesses reopen contrary to public health guidelines and the state's executive orders, there is risk that an insurer could find reason within the policy language to deny COVID-19 related claims."

The Illinois Retail Merchants Association has taken the position from the beginning that the EO is "the best course of action for both consumers and employees," the group's president Rob Karr said via a statement.

"We have also advised retailers about the liability, insurance and other legal issues that may arise from not following the state's guidance," he added.

The Illinois Restaurant Association released a statement encouraging members to follow the EO. The Illinois Licensed Beverage Association (which represents tavern owners) "does not advise" members to violate the executive order.

The governor has also pointed out that many of the businesses that are defiantly reopening have state licenses.

Your local barber or salon owner needs a state license to open and operate. Cosmetologists, electrologists, massage therapists and nail technicians also must have state licenses.

Restaurants and taverns are under state oversight and can be closed down by local public health departments in situations just like this.

The bottom line is, if you don't fear the virus, then you might wanna start to fear losing your license, or being wiped out by lawsuits that aren't covered by insurance.

• Rich Miller also publishes Capitol Fax, a daily political newsletter and