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Coronavirus Business Interruption Insurance Lawsuit


At least 1,300 lawsuits have been filed against insurance companies that denied “Business Interruption” claims from business owners who are suffering economically due to coronavirus.

UPDATE: Court Rules in Favor of Ohio Restaurant’s Business Interruption Lawsuit

In January 2021, a federal judge ruled that Zurich American Insurance Company should pay for an Ohio restaurant group’s financial losses due to COVID-related business interruptions at 16 steak and seafood restaurants in 5 states. Click here to read more.

In-N-Out Sues Insurer for $250 Million COVID-19 Claim Denial

In June 2020, the fast-food chain In-N-Out filed a lawsuit against Zurich American for denying a $250 million claim related to the COVID-19 pandemic. In-N-Out carries an “all risk” insurance policy that specifically includes “entirely unknown and novel risks that may arise which were not previously considered by the company.”

Insurers Could Pay $100 Billion for Coronavirus Losses

The insurance industry estimates it would have to pay $100 billion or more in coronavirus claims, making this the single largest catastrophe in history — significantly more expensive than Hurricane Katrina or 9/11 payouts.

Examples of Coronavirus Business Interruption Lawsuits

Insurance companies have been hit with lawsuits after rejecting claims from a wide range of clients, including celebrity chef Thomas Keller, casinos run by the Chickasaw and Choctaw nations, movie theaters, dive shops, bars, and many others who were impacted by coronavirus.

Was Your Business Interrupted Due to Coronavirus?

Business owners are scrambling in the wake of the coronavirus outbreak in the U.S., forced to close due to government “stay at home” orders, economic conditions, or by choice to avoid infection.

These hardships have forced many businesses to turn to their insurance companies for help, only to find their claims rejected. A growing number of lawsuits have been filed by unhappy policyholders who were unfairly denied compensation after paying hefty premiums.

Unfortunately, many policies were updated to specifically exclude virus-related losses after the SARS outbreak in 2002 and 2003 — but some policies do cover business interruptions due to disease outbreaks.

Insurance Lawyers Can Explain Policy Coverage & Exclusions

It is important for policyholders to talk to an experienced attorney as soon as possible if your insurance company is rejecting your claim.

We can walk you through the policy to figure out what your policy covers, as well as exclusions and limitations. Our goal is to help you get the full entitlement of your policy to relieve your financial strain.

What is Business Interruption Insurance?

Business Interruption (BI) insurance protects against income losses that a business suffers when they are forced to suspend operations due to property damage, typically after disasters. For example, after a tornado, it might cover losses due to the closure of a facility, destroyed merchandise, or extra costs like rent after temporarily relocating.

Are Coronavirus Losses Covered Under Business Interruption Insurance?

Many business owners argue that coronavirus interruptions should be covered because they were prevented from entering their business due to “shelter-in-pace” orders, illness, quarantine, child care after school shut-downs, bans against non-essential workers, and more.

Are There Exceptions to Coverage?

In most cases, contagious diseases do not qualify as “property damage,” but there are exceptions. For example, a restaurant that is unable to use silverware due to COVID-19 may claim their property is damaged. Similarly, contaminated HVAC systems may also qualify.

There are important limitations. Policies might have stand-alone “Bacterial Exclusions” for diseases — but because COVID-19 is a virus, if your policy only excludes bacteria, you might still be covered.

Maximizing Insurance Coverage for Coronavirus

Here are some examples of other insurance policies that may cover losses due to coronavirus:

  • Event cancellation coverage: Traditionally the most direct way to get coverage for an outbreak. An event cancelled due to disease or quarantine may be expressly covered (such as “all risk” coverage).
  • Supply chain losses: Covered under the category of “Contingent Business Interruption (CBI)” due to disruptions to a supplier or customer.
  • Civil authority clauses in property insurance policies: Coverage for business income losses when authorities prevent a policyholder from accessing their property, such as a “stay at home” order, curfew, or street closure.
  • Political risk insurance: This coverage is more common for companies with international investments or overseas operations, but may have a 90-day waiting period before it kicks in.
  • General liability insurance: Coverage for injury to people (not employees), which might cover people who were infected with COVID-19. However, Umbrella and/or Excess Liability policies may contain specific exclusions for diseases.

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