As both business owners and insurance companies attempt to navigate an uncertain world, it’s perhaps no surprise that there’s been an uptick in pandemic-related insurance litigation.
Non-essential business owners who were shut down for months are attempting to make claims for unexpected losses. Insurance providers are countering that policies don’t extend to pandemics. How these legal battles play out will undoubtedly have an impact across the country.
Testing the limits of business interruption policies
Most business interruption insurance policies provide a wide range of coverage. For example, business interruption insurance is likely to cover things such as burst pipes or severe storm damage. However, there is some question regarding how far these policies are supposed to go. Following the SARS epidemic in 2003, many insurance providers added language to their policies which excluded losses from viruses and disease.
While it seems like exclusionary language would effectively settle any debate, things become more complicated when the government orders businesses to shut down. Civil authority clauses may kick in, which can require insurers to pay for a business owner’s losses.
Absent any action from the federal level, these battles will play out on a state-by-state basis. Some state legislatures are considering bills which would require insurers to cover losses related to this pandemic.
The only thing certain in uncertain times is a feeling of uncertainty. Legal battles will play out and things will become more defined as time goes on. For now, all business owners and insurance providers can do is to make their respective cases and work toward protecting their interests. The landscape will look much different in a year or two.
