Business Interruption

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In a perfect world, as 2020 comes to a welcomed end by so many, all the vestiges of COVID-19 would also leave with this largely forgettable year. Not to be.

Though there is some good news with vaccinations already in use and perhaps optimism that this pandemic can be controlled; the damage that was caused in 2020 by government shutdowns, capacity limits in businesses, consumer uncertainty, and health risks has led to a large uptick in the court system dealing with business disruption claims due to this historic pandemic. Below, is some of the latest.

Sport’s bar business interruption lawsuit dismissed

Right here in Florida, a Federal Judge dismissed a sports bar’s lawsuit seeking coverage for lost business due to state-ordered restrictions amidst the COVID-19 pandemic. As we have seen in other similar decisions, the court found that the bar did not experience a “direct physical loss.”Continue Reading As 2020 comes to a close, COVID-19 litigation is not slowing down

In the ever-emerging business interruption coverage world, Superior Court Judge Orlando F. Hudson Jr., a North Carolina Judge, ruled that Cincinnati Insurance Company owes a group of restaurants coverage for losses which flowed from a North Carolina mandated COVID-19 shutdown, in the matter of North State Deli LLC et al. v. The Cincinnati Insurance Co., 20-CVS-02569, in the State of North Carolina General Court of Justice for the County of Durham. This ruling appears to be the first decision to hold that a government-ordered shutdown to contain the virus caused a “physical loss.”

In previous blog posts (Recent COVID-19 Business Interruption Decision is a Win for Insurers and What You Need to Know About COVID-19 and Business Interruption Insurance Coverage), we set forth that these cases are being fought on the issue of whether there is a “physical loss” which would trigger coverage under many business policies. Judge Hudson Jr. stated that the term direct physical loss includes an:

inability to utilize…something in the real, material or bodily world, resulting from a given cause.”

In sum, physical damage or alteration is not needed to trigger the coverage.Continue Reading Trend or Outlier: North Carolina Restaurants, the First to Get Physical Loss COVID-19 Coverage

On July 1, 2020, an Ingham Michigan Judge dismissed a claim of first impression, ruling in favor of an insurer’s decision to deny business interruption coverage due to the finding that the insured business owner did not suffer a direct physical loss under the policy.

Similar to many lawsuits on this uniquely 2020 issue, the case (Gavrilides Management Company v. Michigan Insurance Company) focused on whether there was a “direct physical loss of or damage to the insured’s property” which would trigger the coverage for business interruption. This particular claim centered on a business owners’ two restaurants in Lansing Michigan in the amount of $650,000.

The insurer argued that the business interruption coverage kicks in by an occurrence that actually alters or damages the property, which apparently did not occur. The claimant argued that non-destructive losses are also covered by the policy.
Continue Reading Recent COVID-19 Business Interruption Decision is a Win for Insurers

The coronavirus has impacted more than an individual’s health and well-being. In the wake of this global pandemic, many businesses have been impacted — whether it be from an order from local or state government or because it has been directly hit with employees or customers who were diagnosed with COVID-19.

Businesses have had to grapple with the distinction between “essential” and “non-essential” and alter their budget to purchase PPE and other sanitary items. Projections for revenue for 2020 were obliterated in the process leaving business owners with difficult decisions in terms of whether it is worthwhile to remain open in a limited capacity, temporary closure, furloughs, layoffs, bankruptcy, or in some cases going out of business. The Payroll Protection Program instituted by the Federal Government has provided a temporary salve, however, in many cases business losses continue in big and small ways.

Business Interruption Insurance

The natural offshoot of this business and economic disruption for businesses is whether their business insurance coverage, for which its owners paid premiums month in and month out, ‘owe’ for business income lost, and additional expenses, due to a viral pandemic such as to COVID-19.

Multiple insurers are facing federal class action lawsuits for denying business interruption claims. Further, claims by business owners for business disruption losses have increased exponentially. This post endeavors to examine some of the issues that will be at the forefront for business owners, and carriers, as it pertains to COVID-19.

Coverage

Continue Reading What You Need to Know About COVID-19 and Business Interruption Insurance Coverage