Armed with virus and communicable disease exclusions and high-powered attorneys, insurers are ready to defend their rejection of business interruption claims across the U.S. But lawyers for policyholders see ambiguity in contract language and expect courts to look favorably on their arguments that lean on traditional interpretations of exclusions and claims.
Shuttered businesses across the nation have been filing business interruption claims since government-mandated shutdowns during the coronavirus pandemic, but insurers have largely been denying these claims, citing various exclusions in the policies. Insurers have also maintained that business interruption and other policies were never designed to cover an event like the COVID-19 pandemic, and that paying out the recent claims would bankrupt the industry.
The inevitable legal filings have already begun, and court battles over terms and conditions of policies are likely to drag on for a long time.
"There's no doubt in my mind that there'll be coverage for a lot of these claims, and there's no doubt in my mind that a lot of these carriers are committing bad faith right now by doing these quick denials without a proper investigation," said William Shernoff, a founding partner of California-based Shernoff Bidart Echeverria LLP, which specializes in representing policyholders in bad-faith claims against insurance company denials.
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