US News; Court Sides With Insurers on Business Interruption Claims

A news update from the FAIR organisation over in the USA, which notes that two cases regarding denied business interruption claims have been rejected in court.

In two separate, recent business interruption cases, judges sided with insurers and signified agreement on one key fundamental principle of the business interruption debate: Direct physical damage to property is required to trigger a business interruption claim. Thus, the Covid-19 pandemic and subsequent government-ordered shutdowns do not warrant claims for business interruption.

  • In Washington, D.C., the case’s plaintiffs were restaurants that had shut down to comply with government-mandated orders. Washington, D.C. Superior Court Judge Kelly A. Higashi holds in her decision that Covid-19 does not cause direct physical damage to property, a prerequisite for coverage. She also held in her decision that shutdown orders only directed businesses to take certain actions, but “did not affect any direct change to the properties.” 
  • In Texas, a group of barber shops filed suit against their insurer for business interruption claims due to business lost when the state shut down. Senior U.S. District Judge David Ezra of the U.S. District Court for the Western District of Texas, San Antonio Division, wrote in his decision, “State Farm cannot be held liable to pay business interruption insurance on these claims as there was no direct physical loss, and even if there were direct physical loss, the Virus Exclusion applies to bar Plaintiffs’ claims.”
About alastair walker 4483 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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