Coronavirus Insurance Coverage Battles Begin, Part II- Pending Litigation and Government Action

COVID19

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In a recent blog, we outlined the growing number of new lawsuits being filed against the insurance companies seeking benefits to cover losses stemming from the Coronavirus pandemic. In addition, governments have started to help insurers and insureds cope with the unique complications resulting from this pandemic.  Here are some examples of currently pending litigation and government action being taken.

Pending Litigation

  • An individual is suing the Travelers Indemnity Co. for lost rent from owned properties and lost income from suspended restaurant operations, arguing they have caused “physical loss and damage.”  The suit alleges that Travelers made fraudulent misrepresentations that endanger policyholders. Travelers maintains that its policies have very specific exclusions that don’t cover losses stemming from a virus or bacteria, including physical damage or income.
  • A Philadelphia restaurant sued its insurance company, claiming that orders from both Philadelphia and the Pennsylvania government constitute a “prohibition of access” to its business under the civil authority extension of its insurance policy.  Again, this policy excludes coverage for losses incurred due to virus or bacteria.
  • The Prime Time Sports Grill, Inc. sued Lloyd’s of London under its commercial property insurance policy, seeking lost business income and operating expenses resulting from COVID-19.
  • A District of Columbia restaurant, Proper 21, sued Seneca Insurance Co. for wrongfully denying its business interruption coverage claim stemming from its 95% loss of business during the COVID-19 crisis. Seneca is, of course, arguing for no coverage based on a lack of physical damage and a policy exclusion for losses from virus or bacteria.  The restaurant argues that the District of Columbia’s closing of its business triggers coverage under a building access coverage provision.
  • An Illinois dental clinic sued the Cincinnati Insurance Co. for business interruption losses stemming from the COVID-19 pandemic.  Cincinnati denied coverage based on a lack of physical damage.
  • Tokio Marine Specialty Insurance company is being sued by a Florida dive shop for business interruption losses and additional expenses incurred.
  • An owner of movie theaters and a restaurant sued Lloyd’s of London for business interruption coverage, contending that the pandemic exclusion fails to name COVID-19 with particularity.

Governmental Action

  • The New Jersey Department of Banking and Insurance has issued an executive order that extends grace periods on premium payments for health, life, property, and casualty insurance policies to assist policyholders facing financial hardship due to the Coronavirus outbreak.
  • Governmental relief initiated with the European Union has approved a $10.9B French program (as part of dozens of other programs) which guarantees domestic credit insurance market to assist business in coping with the novel Coronavirus pandemic. This is designed to ensure liquidity of French companies.
  • Florida has enacted a law that calls for insurance premium tax cuts to relieve burdens of businesses. Other measures include sales tax holidays and changes to corporate tax refunds.

The groundswell of litigation and government response to the COVID-19 Pandemic is just starting.  Court decisions and government action will drastically impact the business and insurance industry, and we will keep you apprised and advised as it occurs.

If you have questions concerning insurance coverage issues resulting from COVID-19 or for other reasons, please do not hesitate to give us a call.

Evan-Schwartz

Evan S. Schwartz
Founder of Schwartz, Conroy & Hack
800-745-1755
ESS@schlawpc.com

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