Almost a year into the coronavirus pandemic, insurers are winning most lawsuits from businesses seeking compensation for government-ordered shutdowns.
The trend favoring insurers appears to be continuing in 2021. According to reports, federal judges in Florida dismissed three Covid-19 business-interruption lawsuits earlier this month.
Insurers have persuaded judges to toss about two-thirds of business-interruption lawsuits, according to the University of Pennsylvania Carey Law School Covid litigation tracker.
Judges have dismissed another 18.5% of cases, but with permission to resubmit a claim. Less than one in five (17.5%) lawsuits have been allowed to proceed, according to reports.
Business-interruption coverage is a subset of property insurance. Most policies have included some virus-specific exclusion since the SARS outbreak in the early 2000s.
Sean Kevelighan, CEO of the Insurance Information Institute, told the Hartford Courant that court decisions favoring the insurance industry are due “first and foremost” to policies requiring physical damage.
The courts’ prevailing view has been that economic loss alone does not qualify as direct physical damage or property loss that triggers coverage payment.
A few policyholders are having success by building off prior rulings. In other cases, judges have found that wildfire smoke, gasoline vapors, and carbon monoxide created property damage for business-interruption coverage purposes, lawyers say.
While the insurance industry is mainly having success, more challenging fights loom in cases that present unique circumstances.
The Hartford Financial Services Group Inc. has been the biggest target of lawsuits, according to UPenn tracker.
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