Will Insurance Companies Cover Business Interruption Claims Related to COVID-19?
As the COVID-19 pandemic evolves, new issues emerge for business owners. As a result, there has been a wave of COVID-19 related litigation throughout the country. A recent issue concerns whether or not comprehensive commercial insurance coverage includes business losses suffered as a result of government-ordered shutdowns. Since Connecticut has issued orders forcing many businesses to close during the pandemic, similar suits could arise with Connecticut business owners.
On April 20, 2020, owners of a Florida restaurant filed suit against a global insurance company for failure to pay a COVID-19 related business interruption claim. The suit alleges that the business interruption insurance coverage requires the insurance company to pay for loss of income caused by the executive orders prohibiting access to the restaurant. The suit seeks class action status so that other insured companies with unpaid business interruption claims that have been or will be denied can join the action.
The issue in the case will revolve around the “Extra Expense” coverage clause under which the insurance company promised to pay expenses incurred to minimize the suspension of business, and “civil authority” coverage, payable for losses caused “by the action of a civil authority prohibiting access to the business.” While most commercial policies offered by property and casualty companies contain language specifically excluding coverage for profits lost due to a pandemic, the Plaintiffs’ insurance policy did not include such language.
The Plaintiff argues that their business interruption claim is covered based on an “All Risk” policy that provides coverage for “all risks of loss,” except those which are specifically omitted. According to the complaint, because losses from pandemics are not specifically omitted, the losses are covered.
While this case develops, more are sure to follow. If you have questions regarding your Fairfield County business coverage for losses associated with the COVID-19 pandemic, please email Jim Verrillo at jverrillo@znclaw.com to discuss your policy.
This article was co-authored by legal intern, Alyssa Ferreone. Alyssa is not yet admitted to the practice of law.
