Insurers have to date seen widespread success in arguing that COVID did not end in bodily injury to premises, although there have been outliers which have threatened to upset the stability.
– Advertisement –
Read extra: Insurers are profitable most COVID-19 business interruption lawsuits
In July, a Louisiana attraction court docket reversed a trial court docket judgment in favor of restaurant operator Oceana Grill, which is pursuing sure underwriters at Lloyd’s for BI losses.
The appeals court docket went as far as to set out that the trial court docket had “committed legal error” and had “abused its discretion” in denying a declaratory judgment.
“For the foregoing reasons, we reverse the judgment of the trial court and hold that coverage exists for loss or damage caused by ‘direct physical loss of or damage to’ the appellants’ insured premises as a result of contamination by COVID-19,” the appellate court docket set out.
Also in July, Marina Pacific Hotel Suites noticed some success in its case towards Fireman’s Fund by arguing that COVID might bodily bond with and alter surfaces it touched. The California Second District Court reversed a demurrer, discovering that the claimants had “unquestionably pleaded direct physical loss or damage to covered property”.
– Advertisement –
These are not the solely circumstances the place the courts have gone towards the grain, however some earlier “brushfires” – as William Stewart, lawyer and shareholder at Stewart Smith described them – have already been put out.
“What initially occurred is there were several cases, sort of like sort of popcorn popping,” Stewart stated.
“You hear that one pop, and then another pop, and then all sudden you hear pop, pop, pop, pop, pop –that’s sort of what was happening with these decisions, and they were all going the insurers’ way.”
– Advertisement –
At instances, circumstances in North Carolina, Virginia, Missouri, and Illinois appeared like they had been shifting in policyholders’ favor. However, in accordance with Stewart, “these brushfires were sort of quickly extinguished, when either the appellate courts or a large majority of other courts within that same jurisdiction went along with what was quickly becoming the overwhelming majority view that this was not direct physical loss or damage.”
“As it stands now, the first and most dangerous wave of all this seems to be passing,” Stewart stated.
Stewart’s agency has represented insurers in a number of circumstances – he estimated in the “dozens”. Earlier this week, it noticed success in Pennsylvania, the place the First District court docket dominated {that a} virus exclusion was “unambiguous” in the case of V&S Elmwood Lanes v Everest National Insurance.
US companies might have misplaced out on $606 billion in income per 30 days beneath strict COVID confinement measures, in accordance with estimates by the OECD. This is equal to 85% of US complete annual property and casualty (P&C) web premiums written in 2021 ($715.9 billion in accordance with the Insurance Information Institute).
The worst affected companies have been these in the service business and the place a bodily presence is required, for instance in development.
At the time of writing, the University of Pennsylvania had tracked 751 COVID BI court docket circumstances introduced by companies in the meals and providers business. An extra 253 had been filed by ambulatory well being care providers, whereas 153 got here from the lodging business.
Plaintiffs are usually looking for sums in the a whole lot of 1000’s of {dollars} or above, in accordance with Stewart.
“Most of the cases we’ve seen are in the high six figures up and that goes all the way up [to] cases where insureds are seeking a quarter of a billion dollars,” Stewart stated.
“[You have to] accept the proposition that these cases were a long shot to begin with from the policyholders’ perspective,” Stewart defined.
“It would have to be a pretty high value case for them to decide it’s worth pursuing, so that weeds out a lot of the truly smaller cases.”
Read extra: A plaintiff lawyer’s view on COVID-19 business interruption claims
When the virus hit and shutdown measures had been imposed, the insurance business confronted as much as an “existential crisis” not seen since the asbestos crunch, Stewart stated.
While the scenario has largely performed out in insurers’ favor so far, causes for concern might stay for some.
“The cases that are left are, to a large degree, cases involving large insureds who had policies that have special conditions,” Stewart stated.
“These other policies that have potentially different conditions will have to be litigated separately in earnest on their own merits.”
