Brett Carey talks with Risk & Insurance magazine about current legal battles that offer a glimpse into how COVID-19 business interruption claims might play out post-pandemic in an article published on September 2, 2020.

In one case, a French court ruled that a Paris restaurant owner successfully argued that the insurer must pay the restaurant for two months of income lost due to the pandemic. This ruling has drawn the attention of restaurant owners and insurers around the world.

While the case doesn’t hold any legal precedent in the United States, some American trial courts will undoubtedly come to the same conclusion. Regardless of policy language, some judges or juries may want to protect small businesses and rule in their favor.

“That’s the reality of insurance law and claims. These are real people, real businesses, who paid premiums for their policies,” explained Carey “[For] the courts, particularly if judges are voted in by the people, sometimes it’s difficult to make tough decisions to shut down an insured’s business when they’re relying on this coverage to keep going. The most interesting action, will play out in appellate courts where opinions are binding.”

A U.S. District Court judge in Kansas City is allowing a group of salon and restaurant owners to sue their insurance company over denied business interruption coverage. Attorneys for the businesses allege that COVID-19 led to a “direct physical loss” that damaged property and rendered them unsafe and unusable.

Carey further explained that he was not surprised it passed the motion-to-dismiss phase, because plaintiffs’ attorneys specifically used words in their complaint that appear in the policy — like ‘unusable’ or ‘uninhabitable.’ “What they alleged in the case mirrored the language that could potentially trigger coverage if their facts later come out to be true,” he said. “That was a well-plead complaint.”

For the full article, click here.