In last week’s post, Business Interruption Insurance and the Coronavirus Epidemic, we discussed how businesses impacted by the ongoing Coronavirus epidemic may be able to file a claim under a business interruption clause in their business insurance coverage. We have since learned that, as you might expect, the huge business insurance corporations are scrambling to find reasons to deny such claims. So far, these denials are based on the arguments that 1) business interruptions must be caused by physical damage to a structure housing a business or to a structure that limits access to a business or 2) interruptions caused by epidemics are specifically excluded by “virus and bacteria” clauses in business insurance policies.
In today’s post, the business interruption claims lawyer at The Doan Law Firm reviews three recently filed lawsuits challenging denials of benefits by business insurance companies. He will then discuss the arguments advanced by both sides in these lawsuits before offering suggestions to business owners regarding the legal options that may be available if their business interruption claims are denied by their insurance carriers.
The Cases
In the past week, three lawsuits have been filed asking courts in different parts of the country asking a court to rule on points of law that will impact hundreds, if not thousands, of business owners.
- In Louisiana, attorney John Houghtaling II filed a lawsuit on behalf of New Orleans’ Oceana Grill against the celebrated insurance and reinsurance underwriter Lloyd’s of London asking the court for a declaratory judgment regarding if a business interruption claim must be paid if the restaurant is ordered closed or if its operations are severely curtailed by civil authorities.
- In Oklahoma, the Choctaw Nation has also asked for a declaratory judgment regarding business interruption insurance coverage. In contrast to the Oceana Grill lawsuit, which deals with involuntary closure or curtailment of business activity ordered by civil authority, the tribe is seeking benefits after it voluntarily closed its network of casinos and gambling halls in response to the Coronavirus epidemic.
- In California, restaurant owner and celebrity chef Thomas Keller has filed a lawsuit against The Hartford Fire Insurance Company after his business interruption claim was denied. Keller’s lawyers are arguing that, since Keller’s restaurants were ordered to close by civil authorities in California, the reason the closures were ordered does not matter: the closure orders alone are enough to require The Hartford to pay a business interruption claim.
Although similar in that they deal with business interruption insurance, each of these lawsuits asks the courts to decide issues that are based on unique sets of facts, as discussed in the following section.
Discussion
Business interruption insurance typically covers a policyholder against loss of business income if business operations are disrupted by natural disasters such as hurricanes, earthquakes, and fires. The question the courts are being asked to decide is if an “epidemic” is a “natural disaster.” Insurance carriers are, of course, holding that epidemics are not natural disasters. In fact, many insurance companies have quietly inserted “virus and bacteria” exclusions into their policies to protect themselves from huge losses related to epidemics.
Traditionally, business owners who filed business interruption claims have had to be able to prove physical damage to their place of business. In our opinion, since an epidemic would not cause physical damage, business interruption claims that are based solely on losses due to the Coronavirus epidemic can be legally denied. On the other hand, regardless of how a disaster is defined, we feel business losses that are due to mandatory closure orders would be covered by business interruption insurance.
Contacting a Business Interruption Claims Lawyer
Insurance law is one of the most complex areas of legal practice. Thus, you should never try to deal with one of these giant insurance corporations on your own!
Your insurance company has an army of lawyers and insurance adjusters whose job is to find a way to deny your claim. To make sure that your insurance carrier will treat you fairly, we urge you to contact The Doan Law Firm, a national law practice with offices located throughout the country, to protect your legal right to receive payment for your business interruption insurance claim.
At The Doan Law Firm, we are fully aware of the financial pressures facing you, the small business owner, in this time of unprecedented economic crisis. This is why when you contact our firm to arrange a review of the facts in your business interruption insurance claim, your case review and consultation with our business insurance lawyer are always free of any charges and do not obligate you to hire us as your legal counsel. After discussing your case with our staff, should you decide that a lawsuit is in order and that you would like for us to represent you in court, we are willing to work with you at negotiating a fee schedule where we assume the costs of preparing your case for trial in exchange for a percentage of the final settlement we are prepared to win for you.