As a result of COVID-19 city and state shelter in place orders across the country, thousands of businesses had to close and lost a substantial amount of their business. Many of these businesses had business interruption insurance, which would help them recover some of their losses. However, most of these businesses are finding that when they file a claim for their business interruption insurance, their claims are denied by the insurance company. Across the country, lawsuits have been filed in an effort to help these businesses recover what they have lost.
Business Interruption Lawsuits
As of May 2020, a federal court received notice that over a hundred business interruption lawsuits had been filed. This number does not include suits that have been filed in state courts. It is believed that the number of lawsuits will soon be in the thousands. The federally filed lawsuits have been tagged by the U.S. Judicial Panel on Multidistrict Litigation for the possibility of consolidation before one judge. Plaintiffs have mixed feelings about this possibility, given the variations in insurance policies and state laws.
The central question surrounding all of these lawsuits is whether government closures ordered because of COVID-19 amount to a physical loss of property that would trigger business insurance coverage. Small businesses ranging from restaurants to dental offices to daycares have so far lost billions of dollars in revenue as a result of forced closures. Insurers have given blanket denials to these claims. Without business interruption coverage, it is estimated that as many as 40% of these businesses will permanently close.
In addition to the numerous lawsuits that have been filed, there has been talk of possible legislation that would resolve the issue. States across the country have introduced bills that would help small businesses by requiring insurers to pay on business interruption claims. The federal government is also considering the issue. The U.S. House of Representatives Small Business Committee held a hearing on the issue on May 21st. It is likely that insurers will eventually ask Congress for help in paying out these claims. Federal legislation may be likely, but it is unclear as of now who that legislation will help.
An Experienced Attorney Can Help
If you are a small business who has had your business interruption insurance claim denied, you should have your case evaluated by an experienced attorney. Gregg Goldfarb has 20 years of experience and has committed to helping small businesses receive the compensation they deserve. Contact us online or call us at 305-374-7000 to schedule a free consultation.