Insurance companies are strengthening their business-loss policies in an attempt to curb claims for disrupted operations related to the coronavirus pandemic. Prior to this movement, most policies failed to include definitions for terms such as “communicable disease,” which led to a wave of lawsuits filed against the insurers. For example, many exclusions said insurers would not cover claims arising out of a “communicable disease,” but did not specify what is to be considered a communicable disease. Now, insurers are adding definitions that expressly reference COVID-19 or other SARS-related viruses.
What does this mean for insurers? Some argue that including definitions will not change much, as business-interruption policies cover property damage, which the pandemic does not cause. In other words, businesses have never been entitled to recover because COVID-19 does not damage property. Others see it as giving insurers additional security by eliminating any ambiguity as to whether pandemic-related losses are covered.
What does this mean for businesses affected by the pandemic? There is still hope. According to the UPenn litigation tracker, nearly 1,500 lawsuits have been filed challenging insurance companies’ decisions to deny business-loss claims. Out of the state and federal lawsuits decided thus far, approximately 81% have been dismissed. However, among the state decisions, businesses have prevailed in 65% of cases where polices failed to carve out a coverage exclusion for losses caused by infectious illnesses. And even where there was such an exclusion, businesses were able to win 43% of the cases. Pandemic-related lawsuits are working their way through the courts, with billions of dollars at stake for the insurance industry.
If you or someone you know has questions regarding a loss or potential claim resulting from the COVID-19 pandemic, contact an attorney at Abraham, Watkins, Nichols, Agosto, Aziz & Stogner by calling 713-396-3964 or toll free at 1-888-594-4884.