Is business interruption insurance valid for COVID-19? – FindLaw


Seats above tables in a closed restaurant

Retailers, restaurants, airlines, and other companies are begging Americans to try to return to some sense of “normalcy.” This does not happen. With most of the federal financial support ending, many companies large and small are entering another period of massive uncertainty.

As a business owner, your strategy may not be more complicated than “just trying to stick.” Unfortunately, it appears that another line of defense – business interruption insurance – may not save during the pandemic.

Hundreds of lawsuits already

More than 1,200 COVID-19 related insurance lawsuits have already been filed, according to the University of Pennsylvania. Who tracks insurance claims related to COVID-19. Nearly half of those come from the restaurant and bar industry, which is Continuing to suffer from lack of foot traffic.

Business interruption insurance usually covers a loss of business income due to one or more than one The following factors:

  • Damage to property causes slowing or stopping operations
  • The government prohibits access to your business due to damage or hazardous conditions in the building
  • Property damage to property that is not owned by your company but on which you depend on your operations

Many policies aim to cover situations such as riots, hurricanes, earthquakes, and other disasters. Most of them do not include epidemics in the cases covered.

Insurance companies are gaining the upper hand

Yet, insurance companies have relied on the policies they indicate My body – my body Property damage to win the few lawsuits that have already been filed. The judges 17 of the 23 lawsuits were dismissed To this limit.

“Coronavirus does not physically alter the appearance, shape, color, structure, or other physical dimension of the property,” wrote US District Judge for Northern Illinois Robert Gitelman in dismissing a lawsuit against a dental clinic.

US District Judge for Southern California argued Cathy Ann Bensivengo dismissing the shaving group’s lawsuit. I wrote that the company must prove that the government has banned access to insurance precisely because of property damage. California’s stay-at-home law wasn’t enough.

The US judiciary also has multi-district litigation Efforts to standardize hundreds of lawsuits were rejected Against insurance companies, which may make it easier for business owners to achieve clarity. But insurance companies have argued that different companies that write different policies cannot be combined in fewer cases.

Do you have a chance of a successful claim?

For many judges, it appears that customers’ fear of contracting the virus (and thus staying at home) and government orders to stay at home are not sufficient to win an insurance claim for lost business income. You could argue against a restaurant, for example, that allowing it to be retooled to serve take-out and delivery only prevents the ability to file a claim.

Even now, there is a faint ray of hope in Missouri. In a limited ruling issued earlier this month, U.S. District Court Judge for the Missouri Western District, Stephen Pugh, gave the go-ahead to three lawsuits.

Bough sided with the plaintiffs, who argued so COVID-19 particles were a “physical substance” that damaged property, Which makes it insecure. Plaintiffs in these cases still have to present convincing evidence that their insurance company has violated their policy of dismissing the claim, so the successful outcome is not certain.

However, what these cases prove is that you need to file a claim to start the process – even if you think your insurance company will reject the claim. From there, you and your attorney can decide how to proceed.

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