Since the outbreak of the COVID-19 pandemic, most insurers throughout the country have denied business interruption (BI) claims received from their policy holders based on the economic losses they have suffered as a result of the virus. Many insurers rely on specific language contained in their policies that exclude claims arising from losses due to viruses, bacteria or “contamination”. Even when such precise language is not included in the policies, insurance carriers throughout the industry have denied the claims based on their contentions that the claimed losses did not result from “property damage” because there was no physical damage to the structures or covered property.
Despite billions of dollars in losses claimed by businesses, the public sentiment supporting coverage and the outcry of private citizens, insurance regulators and many politicians, the demands that the government intercede to mandate that insurers cover these claims have largely been unsuccessful. Moreover, although litigation has been threatened throughout the nation, relatively few lawsuits have been filed in proportion to the number of potential claims. In the suits that have been filed, the presiding judges in all but a couple of cases have granted the defendant insurers’ motions to dismiss these legal actions. Most of the decisions support the insurers’ position that the claims are not covered because of the absence of some physical damage to the covered property.