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