As businesses across the country continue to struggle under the weight of economic loss resulting from the government-mandated COVID-19 shutdowns and widespread stay-at-home orders, insurers are facing increased pressure to honor business interruption claims and cover financial losses associated with the COVID-19 outbreak. If your business was ordered to temporarily close to slow the spread of the novel coronavirus and promote social distancing and you have been denied business interruption coverage for the losses your business has sustained as a result of these measures, you may be able to sue your insurer for coverage. Consult an experienced COVID-19 business income loss attorney to learn more about filing a lawsuit for business interruption coverage.
Business interruption (BI) insurance is an insurance policy that provides coverage for business owners who suffer short-term financial loss arising from an interruption in regular business operations as a result of direct physical loss or damage from a covered cause of loss. Interruption insurance is designed to restore businesses to the same financial position they would have been in had the interruption never taken place and business owners nationwide are counting on business interruption coverage to cover their COVID-19 losses. Unfortunately, insurers are claiming that business losses stemming from COVID-19 do not qualify for coverage under business interruption insurance. They argue that losses caused by “viruses or communicable diseases” are excluded from most business interruption policies, and that even if it wasn’t excluded, the virus has not caused the physical loss or damage required for BI coverage to kick in.
The COVID-19 outbreak began in Wuhan, China in December 2019 and the first case in the United States was reported in January 2020. By March, much of the United States had been shut down and Americans were encouraged to stay at home to stem the spread of the novel coronavirus. Many businesses were forced to close and lay off their employees and many continue to suffer massive economic losses as a result of measures put in place to reduce the risk of spreading the virus. To help them get through the pandemic and keep their businesses from going under, business owners turned to their business interruption insurance policies, which they believed were meant to cover losses due to business disruptions caused by crises such as this. However, business owners across the country are finding that their BI claims are being denied, despite the fact that they have been paying premiums on their business interruption policies for years.
A growing number of COVID-19 insurance coverage lawsuits are being filed against insurers by policyholders who argue that losses stemming from COVID-19 should be covered under their business interruption insurance policy. The lawsuits raise similar allegations for insurance bad faith and breach of contract by insurers and their underwriters, who claim that businesses have not suffered physical loss or damage due to COVID-19 and that clauses in business interruption policies exclude coverage for pandemics, viruses and communicable diseases anyway. Plaintiffs in the mounting litigation allege that the mass contamination or threat of contamination and closure resulting from the coronavirus pandemic constitutes the requisite physical loss or damage for business interruption coverage. They also allege that the business losses they have sustained are not due to a loss of customers who have contracted COVID-19, but rather due to “civil authority” actions that forced businesses to shut down to prevent the spread of the virus. The coronavirus business insurance debate has become so heated that some states are considering legislation that would force insurers to cover business losses from the coronavirus pandemic, despite what the BI insurance policies say.
In addition to business owners filing claims for business interruption insurance, there are a growing number of workers’ compensation claims stemming from COVID-19 and claims by event organizers and venues that were forced to cancel conventions, concerts and other large gatherings as a result of the pandemic. Depending on how successful the COVID-19 business loss lawsuits are, some experts estimate that coronavirus insurance costs in the U.S. and United Kingdom together could reach between $11 billion and $140 billion, while others predict that the losses could exceed $500 billion, especially if states step in to force insurers to pay out business interruption claims arising from the COVID-19 crisis. If you have suffered an interruption in your business operations due to COVID-19 and your BI insurance claim has been denied, you may be able to sue your insurer for coverage. To find out if you qualify for a coronavirus insurance coverage lawsuit, contact a reputable business interruption coverage attorney today.