Insurance Companies Facing Class Action Lawsuits


Businessman with headsets using computer in office at night

As more and more claims are filed against insurance companies for the sudden business interruptions, many are being denied under the tense that a closure as a result of the COVID-19 crisis was not considered to be as such.

In San Diego, six insurance companies, among them Lloyd’s of London, Aspen American Insurance and Topa Insurance Company were sued by several small businesses for denying coverage despite several state orders to not do so. According to the plaintiff’s lawyers, the lawsuits “claim that the business purchased “special” property insurance coverage to protect against business interruptions, or disruptions outside of their control. These policies included business income coverage. The firms also noted that all these coverages either included or did not expressly exclude losses caused by viral infections such as COVID-19.

But despite all this, the law firms said that the insurers “refused to uphold their contractual responsibilities for losses suffered due to COVID-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimize the suspension of business and continue operations.”[1] Many states have required that insurance companies cover these loses and delay their premiums for up to two months. To deny this coverage would mean the insurance companies think the COVID Pandemic does not fall under the same definition of business interruption which include floods, forest fires, hurricanes and earthquakes.

With the COVID crisis taking root, many companies are seeking damages to help recover money they have lost due to the economic pause. Some insurance companies might deny this coverage but in reality, most should not. Talk to your insurance provider about what your coverages entail and discuss what will happen moving forward.

 

[1] https://www.insurancebusinessmag.com/us/news/breaking-news/six-insurers-face-federal-class-action-lawsuits-for-denying-business-interruption-claims-220062.aspx

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