Three More COVID-19 Business Interruption Claims See Their Day in Court 

COVID-19 litigation is continuing to pour in. As government mandates shut down businesses, many sought restitution through their business interruption policies. Three such hospitality ventures all insured by the same company followed suit.

Big Onion, Valley Lodge and Rising Dough held business interruption policies through Society Insurance Inc.

Their businesses spanned restaurants and other hospitality-based services. During pandemic shutdowns, and subsequent social distancing mandates, the parties have had to modify operations, suspending indoor dining, losing “significant revenue as a result.”

Each business has sought clarification on what their Society Insurance policy covers in regard to pandemic interruptions. All three allege adhering to state and local government orders and guidance should be covered.

Rising Dough went one step further, stating “the actual presence of the coronavirus itself on the premises” directly attributed to its losses.

The cases were brought to the court.

Society countered that these losses would not be covered because they “simply do not fall within the plain language of the policy.” As with many of these cases, that “plain language” states that business interruption will only kick in if a direct physical loss has occurred, interrupting business operations and causing financial loss.

The three claimants, however, were looking at more than just the “typical” means of triggering business interruption coverage; they sought coverage under civil authority and/or contamination.

Court officials turned to the language of the policy, looking at the different ways the policies defined losses under each given scenario. When looking at coverage under civil authority and the contamination provisions, the court granted Society Insurance’s motions for summary judgment.

It concluded, however, that more factual development was needed in terms of the actual business interruption coverage claims.

Scorecard: These cases will move forward in court, where the plaintiffs will have to show how business interruption should cover their losses.

Takeaway: There is still no COVID litigation end in sight. Insurers have to keep abreast of the claims out there and the many, many ways plaintiffs are trying to gain restitution. &