3. Pandemic triggers deluge of business interruption lawsuits
Posted On: Dec. 28, 2020 4:10 PM CST
On Jan. 20, 2020, the United States recorded its first case of COVID-19, on Feb. 29 Washington was the first state to declare a state of emergency related to the outbreak, and on March 16 the first known coronavirus-related business interruption lawsuit was filed.
Since the litigation began, nearly 1,500 other lawsuits have been filed in state and federal courts by businesses seeking insurance coverage for revenue lost due to government-mandated closures during the pandemic. Businesses ranging from high-end restaurants, to bagel shops, casinos and dentists have all taken their insurers to court.
Even President Trump got involved, suggesting that the policyholders may have coverage.
The March lawsuit filed by New Orleans restaurant Oceana Grill is widely regarded as the first of the COVID-19 insurance suits and Business Insurance’s story detailing the allegations was the third most read story on BI’s website in 2020.
The policyholders in many cases sought declaratory judgments, and insurers quickly responded with motions to dismiss. In May a federal judge in New York ruled in favor of Sentinel Insurance Co. Ltd. in a suit brought by a publisher but gave the policyholder’s attorney “a gold star for creativity.”
Several other early rulings also went in favor of insurers but some courts ruled in favor of policyholders.
Some of the lower court rulings have gone to appeal and more are expected to follow.