One thing is certain, and that is that the COVID-19 pandemic will leave us with a tidal wave of litigation for years to come. There have already been several lawsuits filed against insurance companies that have denied claims for business interruption due to the pandemic. While insurance companies have won some of these lawsuits, in others, businesses have been successful in getting their lawsuits past the dismissal phase and are currently in the midst of litigation. You can expect that these lawsuits will continue for quite some time and that insurance companies will find ways to change policy language in the future to work against businesses.
The pandemic has caused a surge of business bankruptcies. When small businesses were forced to shut down in March, they took a huge financial hit. Many of them did not survive at all. Others thought the lockdowns would be covered since they were undoubtedly a business interruption within the meaning of their policies – or so their owner’s thought. In many cases, insurance companies did not see it that way. Immediately, scores of insurance companies quickly denied these claims, arguing that they were either excluded from the policy or not covered by the plain language of the contract. Thousands of these businesses sued, and the outcome of these cases could result in a significant change in the language of insurance contracts for the foreseeable future.
The Language of Your Policy Will Control the Outcome
The business interruption lawsuits are a prime example of the fact that the court will always look to the language of the policy to decide a dispute. In these cases, businesses are arguing that the language in their policies should cover the COVID-19 pandemic, and insurance companies are arguing the opposite.
The issue for businesses is that some policies contain language that tries to exclude viruses. The question in these cases is how clear that language is. In many lawsuits, it depends on the exact language of the exclusion. Here, sloppy drafting would work against the insurance company because they are the party that drafted the contract. First, you need to show that the language is ambiguous before you can get any further. Some courts have been finding that the language of these exclusions was clear. However, this does not mean that every court will look at the exclusion that same way. It depends on the judge and the specific language used in the insurance contract in question.
Recent Cases Give Business Hope in Their Lawsuits
A recent case in Orlando gave businesses an opening for possible legal arguments that could work in the future. It seems that all policies have some sort of virus-related exclusion. Other businesses are having some success arguing that the physical damage done to their business from the virus-ordered lockdowns somehow gets them around the virus exclusions.
In any event, while plaintiffs in these cases have had a mixed record thus far, there seem to be some pathways to success for them. In addition, many of the dismissals of these cases are on appeal, and higher courts will have their say in the future. What is certain is that this issue will dominate insurance-related litigation for years.
Many Companies Thought They Were Covered
The novel questions presented by pandemic-related litigation are just another example of how having an insurance policy does not always give you the protection that you think when you sign the paperwork. Many businesses simply assumed that a total shutdown of their business because of a government order after a disaster would be automatically covered. However, insurance companies see it differently. In their view, paying these claims could create an existential issue for them, so they find ways to rely on policy language to deny them.
Another development that should give businesses hope for these lawsuits is the fact that an Illinois judge refused to dismiss a large lawsuit brought by dozens of local businesses against an insurance company, allowing the case to proceed.
If your business suffered losses as a result of the pandemic, had business interruption coverage, and your claim was denied, you should still consider a lawsuit against the insurance company to force them to pay your claim. However, time may be running out to file your lawsuit. If an insured has a Claim for Business Interruption insurance, their carrier must be put on notice or face the potential that their claim will be denied for failure to give timely notice. The notice provisions of the policies must be strictly construed. A coverage attorney can counsel a client on coverage and facilitate perfecting the claim. While there have been news reports of cases being unsuccessful, many plaintiffs will be getting their day in court.
Contact an Insurance Coverage Attorney
For insurance coverage and litigation issues, call attorney Michael J. Faul at Herold Law at (908) 647-1022 or contact us online. Mr. Faul can review your policy and advise you whether you have a possible case against the insurance company for denying your claim. The one certainty during these uncertain times is that insurance companies will not willingly pay your business interruption claim because of the COVID-19 lockdowns, and an attorney can help protect your rights.