By: Sara Randel, Associate Attorney, Sutton | Booker | P.C.
Insurers that issue business and commercial liability policies should brace themselves for what may be several years of business interruption claims and lawsuits resulting from COVID-19-related state and local “shut down” orders.
Numerous lawsuits have already been filed against insurers across the country and are providing an early glimpse into emerging “hot topics” in COVID-19 business interruption claims, such as:
- What’s in a policy? Extra expense coverage, civil authority coverage, business interruption/business income coverage, virus/pandemic coverage, and property coverage may provide coverage. Coverage may not be available, however, due to a virus, microorganism, or communicable disease exclusion.
- What’s the covered loss? Plaintiffs are alleging direct physical loss as a result of COVID-19. Do your state and/or local emergency Orders say COVID-19 causes property damage? Examples:
- What’s the cause of the loss? Insureds with virus/communicable disease exclusions are arguing the cause of loss is governmental/civil authority order, not COVID-19. Example:
- Public policy arguments for coverage. COVID-19’s effects are broad-sweeping. Expect public policy arguments for coverage despite policy exclusions, such as insureds’ expectations, insurers’ superior bargaining power, and the unprecedented and significant health and economic impacts of COVID-19.
Be prepared! Know what your local and state emergency Orders say, know your policy language, and know claim trends in your jurisdiction.