Law firm sues for income lost due to court closure

A Georgia bankruptcy law firm sued its insurer last week seeking business interruption coverage for income it allegedly lost after courtrooms in the state were closed due to the COVID-19 pandemic.

In the proposed class-action suit, Karmel Davis and Associates Attorneys-at-Law LLC v. The Hartford Financial Services Group Inc., which was filed on Thursday, the Douglasville, Georgia-based law firm argues that the coronavirus caused direct physical loss to its own office, triggering business interruption coverage under its policy.

In addition, the policy covers losses that result from damage to a “dependent property,” which for Karmel Davis includes bankruptcy courts that have closed or reduced services since government-ordered lockdowns began in March, the suit states.

“Plaintiff suffered an actual loss of Business Income due to direct physical loss or physical damage to the Bankruptcy Court (a Dependent Property),” the suit states.

In a statement, Hartford said: “Unfortunately, viruses are generally outside the scope of business interruption coverage due to the absence of any physical damage. These policies do not cover this exposure and, accordingly, premiums were never collected for it.”

Meanwhile, the policyholder in one of the first COVID-19 lawsuits to be ruled on has withdrawn its appeal. According to court papers, Social Life Magazine on Friday withdrew its appeal of a federal district court judge’s ruling that it was not owed coverage for coronavirus-related income losses.

More insurance and risk management news on the coronavirus crisis here.