Business Interruption Litigation Rolls in Amid COVID-19 Pandemic

Business interruption claims a-plenty are rolling in after the novel coronavirus effectively shut down many non-essential businesses in the U.S.
By: | May 6, 2020

Business interruption claims a-plenty are rolling in after the novel coronavirus effectively shut down many non-essential businesses in the U.S.

The event that typically triggers most business interruption policies is property damage — without which no coverage for lost profits will be awarded. Because the COVID-19 pandemic does not actually impact property, businesses seeking coverage are getting denied.

Yet many are coming together to demand a solution.

On April 17, six class actions suits were filed on the same day against insurers Aspen American Insurance, Auto-Owners Insurance, Lloyd’s of London, Society Insurance, Oregon Mutual Insurance and Topa Insurance Company.

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The plaintiffs run the gamut, from restaurateurs and bridal retailers to dental practices and pizzerias. Among them are thousands of small businesses across the U.S. seeking business interruption reimbursement.

The plaintiffs allege that they purchased property insurance coverage to protect against business interruptions, including ones spurred by the COVID-19 pandemic. The lawfirms representing the plaintiffs add that business income coverage is, in fact, included in their policies.
However, the carriers have denied coverage.

According to the firms, their coverage included or did not expressly exclude losses caused by viral infections.

Scorecard: The suits are in their infancy and will likely continue for months and possibly years to come before a decision is made.

Takeaway: The full weight of COVID-19 business interruption claims has yet to be felt, but as desperation grows to recoup lost profit, there’s likely to be more litigation to follow. &

Autumn Heisler Demberger is the content strategist at Risk & Insurance®. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]