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Insurance companies are not at stake in the COVID BI 'wildfires'

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While insurers have had widespread success so far in claiming that COVID hasn’t caused physical damage to facilities, there have been outliers that threaten to throw the balance off.

read more: Insurers win most of COVID-19 business interruption lawsuits

In July, a Louisiana appeals court reversed a trial court ruling in favor of restaurant operator Oceana Grill, which is pursuing certain Lloyd’s underwriters for BI’s losses.

The Court of Appeals went so far as to say that the trial court “made a legal error” and “abused its discretion” in denying the declaratory judgment.

“For the foregoing reasons, we reverse the judgment of the first instance and deny any loss or We hold that there is compensation for damages,” the Court of Appeals moved.

Also in July, Marina Pacific Hotel Suites had some success in a lawsuit against Fireman’s Fund, arguing that COVID can physically bond with and alter surfaces you touch. . The 2nd District Court of California overturned the challenge, finding that the plaintiff “considered without question direct physical loss or damage to the covered property.”

These aren’t the only cases where courts have opposed grain, but as Stewart-Smith attorney and shareholder William Stewart explained, some of the earlier “brushfires” have already been served. .

“The first thing that happened was that there were a few cases where the popcorn popped,” Stewart said.

“All of a sudden there was a pop, pop, pop, pop, pop.

Lawsuits in North Carolina, Virginia, Missouri and Illinois at times appeared to favor policyholders. However, according to Stewart, “these wildfires have quickly led to the overwhelming majority of courts of appeals or other courts in the same jurisdiction holding that this was not direct physical loss or damage.” Kind of quickly put out the fire when I agreed. Damage.”

“As it stands, the first and most dangerous wave of all of these seems to have passed,” Stewart said.

Stewart’s firm has represented insurance companies on several occasions. He estimates “dozens”. Earlier this week, in Pennsylvania, the First District Court ruled that the virus exclusion was “obvious” in V&S Elmwood Lanes v. Everest National Insurance.

U.S. businesses could have lost $606 billion in revenue each month under strict COVID containment measures, according to OECD estimates. This represents 85% of annual property and casualty (P&C) net premiums written in the United States in 2021 ($715.9 billion according to the Insurance Information Institute).

The worst-affected businesses are those that require a physical presence, such as services and construction.

At the time of writing, the University of Pennsylvania was tracking 751 COVID BI lawsuits filed by companies in the food and service industry. A further 253 applications were filed by outpatient medical services and 153 by accommodation facilities.

Plaintiffs typically seek amounts in the hundreds of thousands of dollars or more, Stewart said.

“Most of the cases we’ve seen are in the high six figures, and it’s been going on. [to] It’s a case where the insured is asking for $2.5 billion,” Stewart said.

“[You have to] Accept the proposition that from the policyholder’s perspective, these cases were a disaster from the start,” explained Stewart.

“It has to be a fairly high-value case for them to be worth pursuing. So many truly small cases are ruled out.”

read more: Plaintiff Attorney’s Views on COVID-19 Business Interruption Claims

When the virus struck and shutdowns were imposed, the insurance industry faced an “existence crisis” not seen since the asbestos crisis, Stewart said.

So far, things have largely been in insurers’ favor, but some concerns may remain.

“The majority of the cases that are left are those involving large insured persons who had policies with special terms,” ​​Stewart said.

“These other policies, with their potentially different terms, need to be seriously litigated on a case-by-case basis on their own merits.”