Litigation and Legislative Efforts to Implicate Insurance for COVID-19 Losses

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Bruce Strikowsky and Joseph Tiger have written a new client alert, “Litigation and Legislative Efforts to Implicate Insurance for COVID-19 Losses.” They write:

The economic devastation wrought by COVID-19 has prompted legislative, regulatory, and litigation efforts to tap insurance coverage. On March 16, 2020, Oceana Grill in New Orleans filed the first reported declaratory judgment action seeking coverage for losses sustained due to the ongoing pandemic. The insured asserts that coverage is available due to action by civil authorities ordering closure of the restaurant. Other suits have followed, including a California action by restaurants affiliated with Thomas Keller, and an Oklahoma action commenced by Native American tribes confronting lost casino revenue. Resolution of the litigated claims will turn on policy language, as well as law and facts specific to the jurisdiction. The threshold issue in most if not all such cases will be whether COVID-19 constitutes direct physical loss or damage to property. Generally, coverage under a property insurance policy depends upon such a showing. Unless the insured can demonstrate direct physical loss or damage to property, existing precedent in most jurisdictions suggests that a policyholder will be unable to recover, whether under business interruption coverage or civil authority coverage. Even in the presence of direct physical loss or damage, coverage may be impacted by potentially applicable policy exclusions.

Read the full alert here.