A series of class action lawsuits have been initiated against certain insurers who have denied business interruption claims filed by their insureds. In each case, the businesses – which include bakeries, taverns, restaurants, nightclubs and bridal retailers – allege they paid premiums to the insurance companies for business interruption insurance for situations where they could be forced to close through no fault of their own, but their claims have been denied. In the complaints, the companies allege that their policies are “all risk” — policies that entitle them to coverage unless the policies specifically exclude the situation. They also cite “civil authority” clauses that provide coverage when their properties are made inaccessible because of orders from the government such as the “Stay at Home” orders issued by most state and local governments. While the insurers named in the complaints refused to comment, it is likely that they will assert that the business interruption coverage in each of the policies required and lacked a direct physical loss or damage to a property caused by a covered peril (i.e. fire, water damage, etc.), which is not the case with the COVID-19 pandemic. This issue will be frequently, and hotly, litigated for the months and years to come.
Stone | Dean has a dedicated insurance coverage practice group available to review the terms and conditions of your policy. Please contact Kristi Dean and Leslie Blozan at Lblozan@stonedeanlaw.com to arrange for a review.