COVID-19 Insurance Developments

Property / Business Interruption Insurance

Litigation in the U.S involving business interruption losses (principally involving whether such losses have arisen in connection with physical loss to property, and whether various exclusions for virus and pandemic apply) is proliferating. Some of the recently-filed cases are noted below.

Five cases v. Travelers and CA Governor (CA) – Mark Geragos, his Los Angeles law firm and several other businesses have sued Travelers claiming the insurer is wrongly refusing to cover claims. The five suits accuse Travelers of failing to honor property insurance policies without a virus exclusion, and which should have been triggered when Los Angeles Mayor Eric Garcetti issued an order closing nonessential businesses on March 15. The suits plead that the “currently raging pandemic” has caused real physical loss and damage around the world and that the CA Governor’s “stay-at-home” order has prohibited access to the properties. The plaintiffs do not expressly seek a ruling that the COVID-19 virus existed at any of the subject properties. It is unclear why the Governor was named as a defendant; it is possible he was named as friendly defendant to give him standing to make statements about why he issued the executive order and that he was concerned about property damage when he did so.

LH Dining LLC v. Admiral Ind. Co. (PA federal court) – A Philadelphia restaurateur alleges that orders closing “nonessential” businesses and dine-in services to prevent the spread of the novel coronavirus triggered “civil authority” coverage of lost income under its commercial.