Business Owners Press Insurance Companies to Honor Loss Claims Due to COVID-19

April 14, 2020 – Media Mention
Northern California Record

Partner and chair of Herrick's Insurance & Reinsurance Group, Alan Lyons, was quoted in an article in the Northern California Record discussing business interruption insurance as it applies to restaurants affected by forced closures due to the COVID-19 pandemic. Restaurants are starting to file lawsuits against insurers refusing to payout. 

Many businesses have business interruption coverage, however, when it comes to payouts, it will depend on the wording for each individual policy. “What businesses can do is they need to review the policy in detail as to what the scope of coverage is, and in many cases, they should submit the claims,” Lyons said.

“Many courts have held there has to be structural damage but there are other courts in several states that have held you don’t need to have structural damage; all you need is to show the property is unusable or uninhabitable.”

“However, physical damage has not yet been interpreted by U.S. courts in the context of a virus,” Lyons said, “and there are several lawsuits now seeking a ruling on that issue. Every day, there seems to be another lawsuit filed against an insurer.”

“What we may see is different states will interpret the issue in different ways, which could lead to a precedent that uninhabitability is sufficient in certain states.”

The civil authority argument also could apply, Lyons said. “With orders by the government to restrict businesses, there may be an argument that it wasn’t the virus it was the governmental order,” Lyons said.