The coronavirus pandemic and lockdown measures have ravaged the US and the entire world. The virus has caused more than 635,000 deaths in the country and created a high amount of uncertainty and economic downturns in most sectors.
As the strict lockdowns have forced many businesses to interrupt or even permanently close their activities, there’s been a surge of insurance claims filed by those most affected by the pandemic. However, the insurance industry has answered with skepticism, and the number of business insurance disputes from COVID-19 has increased significantly.
According to one report from the University of Pennsylvania Law School, there were 1,457 pending lawsuits at the end of 2020 between policyholders and insurance companies. The insurers claim that it’s not their obligation to cover business interruptions and/or losses caused by the pandemic while the companies are accusing the insurers of bad faith practices.
Why Insurance Companies Are Denying Claims
A lot of insurance companies use broad policy wordings that allow them to create loopholes in contracts and deny claims. While the policy might clearly state that it covers business interruptions and losses caused by a disease or virus, such as COVID-19, the insurance company might argue that the policy was actually referring to local outbreaks and government orders and not a pandemic or national lockdowns.
Other insurance companies might argue that while their policies do cover pandemics, they were referring to the flu or typhoid and not COVID-19, creating business insurance disputes from COVID-19.
These loopholes allow insurance companies to deny claims on the basis that this was a national emergency and their policies weren’t designed for such an event.
Lawsuits Regarding Business Insurance Disputes from COVID-19
Businesses buy insurance specifically to protect themselves and their employees in case of interruptions of closure. They pay monthly fees expecting that the insurer will help them cover the financial losses caused by unexpected situations.
Unsurprisingly, numerous businesses have brought lawsuits against their insurers, seeking coverage for the losses they’ve experienced as a result of the pandemic.
One report found that over one-third of the lawsuits have been filed by businesses in the foodservice industry. Moreover, one-third of the cases involved insurance policies that didn’t have a virus exclusion. Nearly one-quarter of the lawsuits were brought as an action class.
Among the lawsuits filed so far, the trend has been to favor the insurers, especially in federal courts. However, this hasn’t stopped businesses to seek justice and challenge the decision of their insurer, and file business interruption lawsuits and insurance disputes from COVID-19.
What Can Businesses Do?
Here are some of the steps you should take if you’ve experienced COVID-19-related loss and/or closure:
- Notify your insurer as soon as possible. Delaying the process may give the insurer grounds to deny the claim.
- Try to minimize your loss – switch to remote work whenever possible, take advantage of government aids, and so on.
- Record everything. Keep a record of every business decision, change, and financial impact that COVID-19 had on your business.
- Keep a list of the dates when employees were tested.
- Record all the measures that you’ve taken to minimize the spread of the virus.
Business Insurance Disputes from COVID-19? We Can Help!
If your business has been affected by COVID-19, you may have exposure to liability for that. If you file a claim with your insurance company, they might try to argue that this is a national emergency and, as such, it’s not their responsibility. Or, they could claim that you haven’t taken all the proper procedures and measures to minimize the risk of infection.
If that’s the case for you, then you should contact an attorney who focuses on analyzing insurance practices. At Burg Simpson, we have the experience, passion, and determination to help you file a case against your insurance company.
Contact us now to learn more about what we can do for you.