Insurers Win A Pair Of Business Interruption Lawsuits

Insurers won two large business interruption lawsuits last week, continuing a largely successful defense against paying pandemic business claims.

In California, U.S. District Judge Judge Jacqueline Scott Corley ruled in favor of the insurance industry on pandemic business interruption claims filed by attorneys representing two French restaurants in the Napa Valley on the grounds that virus exclusion precludes damage coverage that were caused by the COVID-19 pandemic.

"While the court recognizes the chaos that the COVID-19 pandemic and ensuing protective measures have created businesses in this country and around the world, the court cannot put ambiguity into an insurance contract where there is none," said Judge Corley.

This decision in California adds to the growing list of favorable decisions made over the past year and confirms the position of insurers that global pandemic risks are uninsurable.

"Insurers are doing everything possible to respond to the pandemic, including premium discounts, contract renewals and charitable donations, to keep promises to policyholders for covered losses," said the Insurance Information Institute's Future of American Insurance and Reinsurance Initiative.

Hundreds of lawsuits are still pending, and insurers have said the cost could run into billions if blamed for closing businesses.

Many of the lawsuits allege that coverage for "direct physical loss or property damage" was triggered by civil service shutdowns. In other words, the shutdown orders resulted in business owners suffering "direct physical loss" in using their properties.

So far, most judges have dismissed this argument and dismissed cases before proceeding to trial.

In Pennsylvania, owners of Stove and Tap and Al Pastor restaurants lost their offer to force Hartford to pay for losses on pandemic-related shutdown contracts, a federal judge ruled.

The restaurants admitted that the coronavirus was not present at their locations and therefore not covered, ruled U.S. District Judge Mitchell S. Goldberg. Due to official shutdown orders, the properties are neither "uninhabitable nor unusable for the intended purpose," he added.

"I am fully aware that my decision can unfortunately be an obstacle to recovery for the plaintiffs' companies," said Goldberg. "Nevertheless, of course, I have to achieve the result that is compatible with the insurance contracts in question and the applicable case law."

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https://businessservicesnews.ca/insurers-win-a-pair-of-business-interruption-lawsuits/