Houghtaling Loses BI Coverage Claim

A New Orleans judge has denied a motion that would have forced an insurer to pay a business interruption (BI) claim to a restaurant closed because of COVID-19.

The case is particularly significant because it was the first known legal action filed against insurers over COVID-19 and BI. 

The motion, brought by well known class action attorney John Houghtaling II, joins a pool of nationwide rulings that have been overwhelmingly decided in favor of insurers. As in many similar cases, the ruling came down to the physical damage requirement present in most BI policies.

From Claims Journal:

Attorneys who represent insurers laid the groundwork to deny virus-related business-interruption claims early on. They argued that coverage is not triggered under commercial property policies without some tangible physical alteration to the insured property.

State and federal judges around the country have ruled in favor of insurers in motions to dismiss or for summary judgment in about four cases out of five so far.

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Business Interruption Litigation Remains Unsuccessful In Florida

Attempts to force insurers to pay uncovered pandemic-related business interruption claims remain unsuccessful in Florida, as described by a recent article in Florida’s Business Observer:

  • “Out of 29 rulings or resolutions so far in Florida, insurance firms have won all 29 cases, according to the national Covid Coverage Litigation Tracker, a University of Pennsylvania Carey Law School project.”

Quoting the Triple-I’s Mark Friedlander, the piece notes these lawsuits have failed because most policies contain virus exclusions or require physical damage to trigger a business interruption claim:

  • “Industry officials say insurers have been prevailing in these cases for the simple reason that policy language doesn’t cover a pandemic-driven business shutdown. Also, about  80% of business interruption policies in the U.S. have virus exclusions, says Mark Friedlander, a spokesman for the Insurance Information Institute, a pro-insurance industry group.”

To read the full piece from Business Observer, click here.