SPECIAL REPORT: An Update on the COVID-19 Business-Interruption Legal Fight
As insurance companies continue to deny insurance coverage for COVID-19 business income losses, many businesses are filing suit in an attempt to collect under their policies. As more suits are filed, a growing number of courts are dismissing these lawsuits. Many judges are finding that some amount of tangible alteration to the property is required to trigger coverage. As of October 15th, approximately thirty-five COVID-19 business-interruption cases have been decided. Out of those, twenty-four of those lawsuits have been dismissed. Out of the remaining eleven cases that were not dismissed, three of those rulings came from the same judge in Missouri, and four of those rulings came from Ohio. These cases are proceeding. Given these numbers, it seems a majority of Judges are finding that there must be actual physical damage to property, and because the coronavirus does not physically alter the appearance or structure of the property, coverage is not triggered.
There have been two cases decided in Illinois, both of which were dismissed with a final order barring further litigation in those cases. The first case, which was dismissed on September 21st, was brought by a dentist office. The dentist office had an insurance policy in place that did not contain a virus exclusion. However, in his opinion, Judge Robert Gettleman, of the Federal Trial Court in Chicago, dismissed the case for a lack of actual physical damage to the premises. The second case to be decided in Illinois was brought by a restaurant doing business as Harold’s Chicken. The restaurant’s policy included a virus exclusion, but their complaint alleged that the policy’s virus exclusion is not applicable because the sustained loss was “the result of the Governor’s Closure Orders” and not caused by the presence of COVID-19. Despite Harold’s argument for coverage triggered by closure orders, this case was also dismissed.
It is unknown how other courts will rule on the cases that have yet to be decided. A University of Pennsylvania database, tracking these cases, shows that over 1,000 business interruption lawsuits have been filed, with at least 100 of these cases being filed in Illinois. We will continue to monitor the outcome of these lawsuits and provide updates when available.
Additionally, many businesses and insurance companies are calling for a federal solution to provide business relief now and an insurance program prospectively, such as the terrorism risk insurance program instituted after the terrorist attacks on September 11, 2001, to provide insurance coverage for virus and pandemic losses.
Please be aware that the information contained herein is current as of the date of the release of this Report and is subject to changes and modifications. If you have any questions or need additional information, please contact us.
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