Since June 2022, policyholders have grown cautiously optimistic as two state appellate courts have dominated in favor of policyholders searching for protection for enterprise interruption loss stemming from COVID-19. As has been nicely documented because the pandemic started, courts have largely declined to search out protection for such loss, usually based mostly on the belief that COVID-related closures don’t fulfill the “bodily loss or harm” requirement present in most insurance policies.
In mid-June, nevertheless, a Louisiana appellate court docket discovered the presence of coronavirus on an insured’s premises brought about lined “bodily loss or harm” to property. And lately, a New York appellate court docket unanimously affirmed a ruling permitting a policyholder to pursue a enterprise interruption declare for revenue misplaced throughout a government-ordered shutdown. The disputed coverage, held by the New York Botanical Backyard, covers enterprise interruption loss however does situation protection on bodily harm to property. Therefore, the First Division of the New York Appellate Division discovered that the insurance coverage provider couldn’t correctly depend on rulings conditioning protection on a whole denial of entry to property resulting from bodily harm. As a substitute, the court docket discovered protection was probably obtainable the place an insured enterprise experiences a slowdown of operations resulting from a air pollution incident.
The court docket additionally acknowledged the viability of the Botanical Backyard’s dangerous religion declare, discovering the Botanical Backyard had adequately alleged that the insurance coverage provider “didn’t conduct a whole or truthful investigation of its declare, had no meritorious foundation for denying the declare, and easily denied it in accordance with a enterprise coverage of denying COVID-related enterprise interruption claims.”
The ruling serves as a reminder that not all enterprise interruption insurance policies are alike, and many comprise extra favorable triggers or characteristic ambiguities that may be leveraged to entry protection. Whether or not a corporation’s enterprise interruption losses are coronavirus-related or stem from different causes, it is very important assessment insurance coverage insurance policies carefully and seek the advice of with protection counsel to ensure you are exploring all potential theories of restoration.
Article authored by Paul Moura and Drew Wegner