"Examining the Current Status of COVID-Related Business Interruption Claims"

Kori Wagner authored an article for Risk Management providing an update on how business interruption insurance claims related to COVID-19 are being handled in courts more than two and a half years after the onset of the pandemic.

“The claims filed by insureds for COVID-19-related business interruption claims typically cite to two main provisions of the policy: business interruption and civil authority,” Wagner explained.

Related to business interruption, there have been 46 federal circuit court cases decided since 2021 on this issue, and in nearly every case the court has been tasked with evaluating language to determine whether an insurance policy provides business income interruption coverage. “While the opinions vary slightly, the overwhelming consensus is that COVID-19 does not constitute a ‘direct’ or ‘physical’ loss as required by the policy language. Instead, courts have held that a physical loss of property requires a tangible alteration or deprivation to the property itself,” she said.

Related to civil authority provisions, Wagner highlighted two cases where courts did not provide coverage, with one holding that the city, state and federal orders restricting access to businesses were issued to mitigate the spread of the virus and not as a direct result of a covered cause of loss to nearby property. Another court held that COVID-19 should not be covered under the civil authority provision because there was no tangible physical change on the nearby properties.

For more details on the many cases presented to state, federal and appellate courts and trends in their findings, please click here.