The novel coronavirus (COVID-19) outbreak has changed the world as we know it, including business insurance coverage. Many companies have struggled to keep their doors open due to stay-at-home orders and lack of income. Unfortunately, even with programs such as the Paycheck Protection Program, businesses find little assistance.
Companies Are Now Filing Bad Faith Insurance Claims
Many companies have tried to recover losses through their business insurance policies. Most insurers turn down these claims quickly, stating pandemic losses are not covered. As a result, businesses are filing bad faith insurance lawsuits due to the insurer’s lack of investigation.
Big Onion Tavern Group LLC et al v. Society Insurance Inc.
In a recent lawsuit, a group of restaurants and movie theaters claimed their insurance company, Society Insurance Inc., immediately denied claims without a reasonable investigation. They also claim the insurance company’s policies don’t include a pandemic exclusion.
Mace Marine Inc. v. Tokio Marine Specialty Insurance Co.
Another lawsuit filed in Florida by Mace Marine Inc. alleges a claim denial by Tokio Marine Specialty Insurance Co. The company stated the insurer denied the insurance claim without a substantive investigation of the premises.
Other lawsuits have been filed by companies in New Orleans, California and Oklahoma, all demanding coverage under their insurance policies.
As of the writing of this blog post, there are no rulings for any of these lawsuits. It’s not clear how these claims will be handled by insurance companies or the court. With these cases making headlines, though, we expect to see similar cases filed based on bad faith due to lack of investigation and pandemic exclusion.
Changes Made After SARS Outbreak Prevent Business Interruption Claims
Some insurance companies learned their lesson in 2002 when the SARS outbreak resulted in millions of business interruption insurance claims. Many insurers added exclusions to their commercial policies for losses caused by viruses or bacteria. Will insurance companies who failed to add the exclusion need to pay? Only time will tell.
Suspecting an Act of Bad Faith? Call an Attorney Today.
We recommend any claim of insurance bad faith undergo review by an attorney before moving forward. We assist individuals and businesses who believe they’ve become a victim of bad faith. To learn more about how we can assist you, send us a message.