Multiple court jurisdictions have issued decisions on "business interruption" coverage are so far favoring insurers as they fight claims for lost income during COVID-19. Jurisdictions ruling for insurance companies include California, Michigan and the District of Columbia, as well as in federal courts in Texas and California. Attorneys for policyholders are continuing to fight, noting that many suits are awaiting a decision, and appeals courts have yet to rule.
Many business interruption policies require “direct physical loss or damage” to property for coverage to apply. Others specifically exclude coverage for damage caused by viruses.
A test case out of Missouri did not exclude virus damage but did require a direct physical loss.
In that case, the plaintiffs alleged that COVID-19 is a physical substance that attached to and damaged their properties, and their all-risk policies should cover lost income. However, insurers argue that policies are intended to cover business losses caused by physical damages to property from events such as fires, and COVID-19 causes no physical damage.
As court losses mount, a coalition of small businesses is backing a House bill, the Business Interruption Relief Act. The bill would create a voluntary program for insurers to pay claims and obtain reimbursement from the federal government.
The materials on this page offer a general overview of issues companies may face and of the Firm’s relevant capabilities. Our goal is to help you navigate through these uncertain times, Fazzio Law is in your corner!
Category: COVID-19 Relief Law
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