String of class actions claim pandemic risks not excluded from BI policies

By Adrian Ladbury |

The legal assault by US policyholders on business interruption (BI) policies to seek redress for the massive losses incurred by the Covid-19 pandemic has been stepped up a notch as four leading law firms filed a series of actions against six insurers, including underwriters at Lloyd’s of London, in what they describe as the “broadest effort yet” to force insurers to pay up on BI policies.

The insurance industry in the US and worldwide was quick to deny coverage under BI policies, pointing out that the pandemic risk had been excluded from virtually all policies since the SARS outbreak in 2003. Insurance associations in the US have warned that legislative efforts in seven states so far to retroactively open up the BI policies to the risk coupled with legal action could bankrupt the sector. The insurers also argued that such a retroactive change in contract law would be unconstitutional.

But these latest class actions and other recent suits being prepared in the US and UK suggest that many plaintiffs may not actually need a retroactive change in the BI contracts to win damages. It seems that the BI policy wordings issued by many insurers are not as watertight as they originally claimed and the plaintiff lawyers clearly smell blood.

“In all instances, these coverages either included or did not expressly or effectively exclude losses caused by viruses such as Covid-19, which caused state and municipal governments to mandate widespread business closures,” reads the statement issued by the four law firms carrying out the class actions.

In this case, the plaintiffs are represented by DiCello Levitt Gutzler, The Lanier Law Firm, Burns Bowen Bair, and Daniels & Tredennick. The insurers named in the lawsuits are Lloyd’s of London, Aspen American Insurance, Auto-Owners Insurance, Society Insurance, Oregon Mutual Insurance, and Topa Insurance Company.

Initial plaintiffs include a San Diego restaurant and nightclub; a Cleveland-area bridal retailer; a Wisconsin-based bakery and cafe; a local Minnesota chain of restaurants and bars; a St Paul, Minnesota dental practice; a Portland, Oregon restaurant; and a New York restaurant group and pizzeria.

The law firms issued a joint statement on 17 April that states: “US businesses decimated by the Covid-19 pandemic today filed federal class-action lawsuits against six insurance companies for denial of policy claims they had purchased to protect against business interruptions. The suits represent the broadest effort yet to compel insurance companies to fulfil promises made to hundreds of thousands of US businesses that purchased insurance coverage to protect against precisely this situation.

“Businesses nationwide have, for years, purchased expensive insurance policies to protect them from losses exactly like those they are currently enduring. Each of the lawsuits claims that the businesses purchased special property insurance coverage to protect against business interruptions or disruptions outside of their control. These policies included business income coverage, which promises to pay for losses due to necessary suspension of operations. In all instances, these coverages either included or did not expressly or effectively exclude losses caused by viruses such as Covid-19, which caused state and municipal governments to mandate widespread business closures.

“Despite these facts, the insurers have, on a broad and uniform basis, refused to uphold their contractual responsibilities for losses suffered due to Covid-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimise the suspension of business and continue operations.”

Adam Levitt, co-counsel to the plaintiffs and a partner at DiCello, Levitt Gutzler, said: “For many small business owners trying to provide for their families and employees, this type of insurance coverage was an additional expense that they would have preferred not to carry but felt a responsibility to do so. For insurers to now tell them, in the most challenging of times, that the joke was on them and their policies were worthless, is unethical and abhorrent.”

The statement said that most property insurance policies sold in the US, including those sold by the defendants, are all-risk property damage policies. These types of policies cover all risks of loss, except for risks that are expressly and specifically excluded.

“Insurers will deny almost every claim – even the most legitimate ones – because that’s just how they operate,” said Mark Lanier, co-counsel to the plaintiffs and founder of The Lanier Law Firm. “But at the end of the day, this really is a straightforward issue about honouring their agreements. As our nation emerges from this horrific pandemic, businesses of all sizes will be critical to restarting the economy. In playing their usual claim-denial games, these insurers are threatening the welfare of not only small-business owners and their families, but the entire US economy.”

Timothy Burns, a partner at Burns Bowen Bair, added: “Countless businesses across the United States are pinning their hopes of reopening and rehiring laid-off or furloughed employees on proceeds from insurance. Insurance companies thrive by selling protection against maladies of all kinds. They pocket huge profits when material events are avoided but must bear the responsibility of honouring their policies on the rare occasions when these events occur. By refusing to do so, they are not running a business at all, but a large-scale rigged carnival game where no matter the scenario, the customer always loses. It’s just not right, and we will do everything in our power to ensure that these businesses are made whole.”

As suggested above, US insurers and international surplus lines insurers do appear to face a serious threat from these suits because of the nature of the all-risks policies sold in the US and a building case for the pandemic to be determined as a form of physical damage.

The suit filed on behalf of New York-based Gio Pizzeria against underwriters at Lloyd’s shows the scale of the threat posed to the BI policies.

It states: “In many parts of the world, property insurance is sold on a specific peril basis. Such policies cover a risk of loss if that risk of loss is specifically listed (such as hurricane, earthquake, H1N1, etc.). Most property policies sold in the United States, however, including those sold by underwriters insurance, are all-risk property damage policies. These types of policies cover all risks of loss except for risks that are expressly and specifically excluded. Under the heading ‘covered causes of loss’, underwriters agreed to pay for direct physical loss ‘unless the loss is excluded or limited’ in the policies.”

The suit continues: “Underwriters did not exclude or limit coverage for losses from viruses in plaintiffs’ policies or those of the other class members. Losses due to Covid-19 are a covered cause of loss under the underwriters’ policies with the special property coverage form.

And it adds: “In the special property coverage form, underwriters agreed to pay for insureds’ actual loss of business income sustained due to the necessary suspension of their operations during the ‘period of restoration’ caused by direct physical loss or damage. A ‘slowdown or cessation’ of business activities at the covered property is a ‘suspension’ under the policy, for which underwriters agreed to pay for loss of business income during the ‘period of restoration’ that begins 72 hours after the time of direct physical loss or damage.

“The presence of virus or disease can constitute physical damage to property, as the insurance industry has recognised since at least 2006. When preparing so-called ‘virus’ exclusions to be placed in some policies, but not others, the insurance industry drafting arm, ISO, circulated a statement to state insurance regulators that included the following: ‘Disease-causing agents may render a product impure (change its quality or substance), or enable the spread of disease by their presence on interior building surfaces or the surfaces of personal property.’

“When disease-causing viral or bacterial contamination occurs, potential claims involve the cost of replacement of property (for example, the milk), cost of decontamination (for example, interior building surfaces), and business interruption (time element) losses. Although building and personal property could arguably become contaminated (often temporarily) by such viruses and bacteria, the nature of the property itself would have a bearing on whether there is actual property damage. An allegation of property damage may be a point of disagreement in a particular case.”

For some time now, senior claims experts in the London market in particular have warned of the lack of investment made in recruitment, training and education of claims specialists as the insurers fought hard to win business and tightly control costs during the long soft market. Those insurers that shifted investment away from the claims function towards sales may soon be regretting the decision. It seems increasingly likely that equity analysts may soon be basing their advice to investors on which insurers and reinsurers to invest in based on the quality of their claims and wordings staff.

 

Coronavirus Update: Protests Erupt, Insurance Coverage Lawsuits and More

By Heather Turner | 

In the U.S.

According to John Hopkins University (as of April 20, 2020):

  • Total U.S. cases: 760,570
  • Total U.S. deaths: 40,724

RIMS issued a letter to the U.S. Department of the Treasury, Congress and President Trump requesting the creation of a pandemic risk insurance program to accelerate economic recovery. In the letter, RIMS asserts that a pandemic risk insurance program would provide greater access to capital from lenders and establish a viable insurance market. It would also provide greater resilience to U.S. organizations in the event of a future pandemic.

Rep. Mike Thompson (D-Calif.) introduced the Business Interruption Insurance Coverage Act of 2020, a bipartisan bill to ensure businesses that purchase interruption insurance won’t get their claims denied because of major events, such as the coronavirus pandemic. In response, industry leaders voiced opposition to the bill, with one saying the bill, and others like it, “would apply business interruption coverage where it doesn’t exist, exacerbating existing disruptions and further delaying our nation’s economic recovery.”

Six class-action lawsuits were filed on Friday (April 17) against insurance companies for denial of policy claims businesses had purchased to protect against business interruptions, according to a press release. The plaintiffs are represented by DiCello Levitt Gutzler LLC, Lanier Law Firm PC, Burns Bowen Bair LLP, and Daniels & Tredennick. The cases include:

  • Gio Pizzeria & Bar Hospitality, LLC and Gio Pizzeria Boca, LLC v. Certain Underwriters at Lloyd’s, London, U.S. District Court for the Southern District of New York
  • Rising Dough, Inc., et al. v. Society Insurance, U.S. District Court for the Eastern District of Wisconsin
  • Bridal Expressions LLC v. Owners Insurance Company, U.S. District Court for the Northern District of Ohio
  • Caribe Restaurant & Nightclub, Inc. v. Topa Insurance Company, U.S. District Court for the Central District of California
  • Dakota Ventures, LLC d/b/a/Kokopelli Grill v. Oregon Mutual Insurance Co.; U.S. District Court for the District of Oregon
  • Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Company; U.S. District Court for the Northern District of Texas

Boston Scientific Corp. will start manufacturing a low-cost ventilator.  The technology was recently approved for emergency use by the USDA.

More than 22 million Americans filed for unemployment within the past month — a level of job loss not seen since The Great Depression, says The Washington Post.

President Trump offered state governors a “road map” to reopen economies on Thursday (April 16) that includes three phases.

On Sunday (April 19), demonstrations in cities around the U.S. escalated as protesters demanded the reopening of their local economies, as House Conservatives call for the country to reopen immediately. According to Reuters, around 2,5000 gathered at the Washington state capitol to protest the state’s stay-at-home order. In Denver, health care workers stood in counter-protest against people who gathered at the state capitol demanding the end of the state’s shutdown. Maryland, Michigan, Ohio, Kentucky, Minnesota, North Carolina, Utah also saw protests over the weekend.

United Airlines said it expects a $2.1 billion loss in first-quarter 2020 as a result of dramatic declines in travel from the coronavirus.

The CEO of Chubb, Evan Greenberg, told Bloomberg this regarding pressuring insurers to cover business interruption losses: “The insurance industry is a fundamental part of the economic plumbing of this country. Forcing insurers to foot the bill for losses not covered by policies “would do great damage. It would bankrupt the industry.”

Around the world

According to the World Health Organization (as of April 20, 2020):

  • Total cases globally: 2.31 million
  • Total deaths globally: 157,847

The U.S. (760,570), Spain (195,944), Italy (178,972), Germany (141,672), and the U.K. (120,071) have the most reported coronavirus cases globally.

Catastrophe risk modeling firm AIR Worldwide launched its COVID-19 Projection Tool that provides COVID-19 case and death projections worldwide for the next four weeks. The data will be updated daily.

The Financial Conduct Authority in the U.K. says there are clear cases where insurers should pay claims to small and medium-sized enterprises for business interruption claims stemming from COVID-19.

The European Union has drafted plans for a partial lifting of restrictions and to get people back to work to help alleviate the economic pains brought on by COVID-19-caused shutdowns.

Greece is extending its ban on flights to and from the U.K., the Netherlands, Turkey, Spain and Itlay until May 15.

In an interview with Bloomberg Television, Allianz SE Chief Executive Officer Oliver Baete said, “The coronavirus has hit our industry like a meteorite impact… There will be huge losses for the industry coming, it just takes a while for those to materialize.”

The last three cruise ships at sea will finally arrive at land today. The MSC Magnifica will dock in the south of France; the Costa Deliziosa will dock in Barcelona, and the Pacific Princess will dock in Los Angeles.

Fitch Ratings downgraded Hong Kong’s long-term economic rating to ‘AA-’ from ‘AA,’ with real GDP falling by 5% in 2020.

 

https://www.propertycasualty360.com/2020/04/20/coronavirus-update-protests-erupt-insurance-coverage-lawsuits-and-more/?printer-friendly

Pizzeria Says Insurer Denied COVID-19 Closure Claim

By Steven Cohen | April 21, 2020

A class action lawsuit has been filed against certain underwriters at Lloyd’s by a pizza restaurant claiming that the insurance company has failed to pay for business loss claims that it suffered due to the worldwide COVID-19 pandemic.

Plaintiffs GIO Pizzeria & Bar Hospitality LLC and GIO Pizzeria Boca LLC say that they own Nick’s New Haven Style Pizzeria & Bar with locations in Coral Springs, Fla. and Boca Raton, Fla.

GIO states that it was forced to suspend or reduce operations for their restaurant due to COVID-19 and the orders issued by civil authorities in Florida which mandated the suspension of businesses for on-site services.

The plaintiffs alleges that certain underwriters from Lloyd’s London have refused to pay them under their Business Income, Civil Authority, Extra Expense, and Sue and Labor coverage for losses that have occurred due to the COVID-19 pandemic.

In fact, the plaintiffs state that the defendant has, “on a wide scale and uniform basis” refused to pay its insureds under these policies.

The business interruption lawsuit alleges that, in order to protect themselves if they suddenly had to suspend operations for reasons that were outside of their control, they purchased insurance coverage from LLoyd’s which includes specialty property coverage.

The pizzeria’s policy has a section on “Business Income” coverage, which promises to pay for losses due to the necessary suspension of operations following physical loss or damage to property, the GIO Pizzeria class action lawsuit maintains.

In addition, the policy also provides for “Civil Authority” coverage, in which underwriters will pay for losses incurred by the action of a civil authority that prohibits access to the premises, the plaintiffs state.

The business closure lawsuit claims that the Special Coverage Property Form does not include an exclusion for losses that could occur caused by viruses and communicable diseases.

The pizzeria argues that the presence of a virus or disease can constitute physical damage to a property, which the insurance industry has recognized since at least 2006.

“In the Special Property Coverage Form, Underwriters agreed to pay for its insureds’ actual loss of Business Income sustained due to the necessary suspension of its operations during the ‘period of restoration’ caused by direct physical loss or damage,” the GIO Pizzeria class action lawsuit states.

The restaurants’ policies constitute contracts in which Lloyd’s were paid premiums in exchange for the promise to pay for losses covered by the policy, the GIO pizzeria class action lawsuit argues. Despite this coverage, Lloyd’s underwriters allegedly refuse to provide coverage to the pizzeria.

GIO states that on March 17, 2020, Boca Raton put out a civil authority order which required the closing of bars and restaurants from selling alcohol as well as the suspension of dine-in eating. The plaintiff notes that this order has been in effect since that date and has not been lifted.

On the same date, the plaintiff alleges that Ron DeSantis, the Governor of Florida, issued a civil authority order which restricted bars from serving alcohol and ordered every restaurant to limit its capacity to 50 percent of their current building capacity.

On March 20, DeSantis issued another civil order which required the full suspension of alcohol sales for consumption on site as well as the full suspension of all dine-in eating at restaurants.

The plaintiff says that COVID-19 has caused direct and physical loss to their covered properties under their policies issued by Lloyd’s by denying use of and damaging the plaintiff’s property due to the necessary suspension of their activities. However, the insurance company reportedly won’t provide coverage.

“By denying coverage for any Business Income losses incurred by Plaintiffs and the other Business Income Breach Class members in connection with the COVID-19 pandemic, Underwriters has breached its coverage obligations under the policies,” the plaintiff alleges.

GIO Pizzeria says they have suffered damages as a result of Lloyd’s breaches of the policies and that the insurance carrier is liable for these damages, an amount which will be established at trial.

Prospective Class Members include: “All persons and entities that: (a) had Business Income coverage under a property insurance policy issued by Underwriters; (b) suffered a suspension of business related to COVID-19, at the premises covered by their Underwriters property insurance policy; (c) made a claim under their property insurance policy issued by Underwriters; and (d) were denied Business Income coverage by Underwriters for the suspension of business resulting from the presence or threat of COVID-19.”

The plaintiff is represented by Greg G. Gutzler, Adam J. Levitt, Amy E. Keller, Daniel R. Ferri, Mark Hamill, Laura E. Reasons, Mark A. DiCello, Kenneth P. Abbarno, and Mark Abramowitz of DiCello Levitt & Gutzler LLC, Mark Lanier, Alex Brown, Skip McBride, and Evan Janush of the Lanier Law Firm PC, Timothy W. Burns, Jeff J. Bowen, Jesse J. Bair, and Freya K. Bowen of Burns Bowen & Bair LLP, and Douglas Daniels of Daniels & Tredennick.

The GIO Pizzeria Class Action Lawsuit is GIO Pizzeria & Bar Hospitality LLC, et al. v. Certain Underwriters of Lloyd’s London Subscribing to Policy Numbers ARP-74910-20 and ARP-75209-20, Case No. 1:20-cv-03107, in the U.S. District Court for the Southern District of New York.

 

https://topclassactions.com/coronavirus-covid-19/pizzeria-says-insurer-denied-covid-19-closure-claim/

Six Insurers Face Federal Class Action Lawsuits For Denying Business Interruption Claims

By Lyle Adriano | April 20, 2020

Federal class action lawsuits have been filed against several insurance companies for denying policy claims the plaintiffs had made to protect against business interruptions – specifically claims related to the business closures mandated in the wake of the COVID-19 pandemic.

According to a joint release from the law firms DiCello Levitt Gutzler, The Lanier Law Firm, Burns Bowen Bair, and Daniels & Tredennick, six insurance companies have been named as defendants.

The six insurers are Aspen American Insurance, Auto-Owners Insurance, Lloyd’s of London, Society Insurance, Oregon Mutual Insurance, and Topa Insurance Company.

Plaintiffs for the lawsuit include a restaurant/nightclub in San Diego, CA; a bridal retailer in Cleveland, OH; a Madison, WI-based bakery; a chain of restaurants/bars in Minnesota; a St. Paul, MN-based dental practice; a restaurant in Portland, OR; and an NY-based restaurant group and pizzeria. Each of the plaintiffs are represented by lawyers from the three aforementioned law firms.

The law firms said that each of the lawsuits claim that the business purchased “special” property insurance coverage to protect against business interruptions, or disruptions outside of their control. These policies included business income coverage. The firms also noted that all of these coverages either included or did not expressly exclude losses caused by viral infections such as COVID-19.

But despite all this, the law firms said that the insurers “refused to uphold their contractual responsibilities for losses suffered due to COVID-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimize the suspension of business and continue operations.”

“Businesses nationwide have, for years, purchased expensive insurance policies to protect them from losses exactly like those they are currently enduring,” said Adam Levitt, plaintiff co-counsel and partner at DiCello Levitt Gutzler. “For many small business owners trying to provide for their families and employees, this type of insurance coverage was an additional expense that they would have preferred not to carry but felt a responsibility to do so. For insurers to now tell them, in the most challenging of times, that the joke was on them and their policies were worthless, is unethical and abhorrent.”

The law firms’ release noted that most property insurance policies sold in the US – including those sold by the defendants – are all-risk property damage policies.

“Insurers will deny almost every claim – even the most legitimate ones – because that’s just how they operate,” said Mark Lanier, plaintiff co-counsel and founder of The Lanier Law Firm. “But at the end of the day, this really is a straightforward issue about honoring their agreements. As our nation emerges from this horrific pandemic, businesses of all sizes will be critical to restarting the economy. In playing their usual claim-denial games, these insurers are threatening the welfare of not only small-business owners and their families, but the entire US economy.”

“Countless businesses across the United States are pinning their hopes of reopening and rehiring laid-off or furloughed employees on proceeds from insurance,” added Timothy Burns, partner at Burns Bowen Bair.

Burns also commented that insurers thrive by selling protection against all sorts of maladies, pocketing profits when material events are avoided, but must honor policies on the occasion those incidents occur.

“By refusing to do so, they are not running a business at all, but a large-scale rigged carnival game where no matter the scenario, the customer always loses,” Burns remarked. “It’s just not right, and we will do everything in our power to ensure that these businesses are made whole.”

 

https://www.insurancebusinessmag.com/us/news/breaking-news/six-insurers-face-federal-class-action-lawsuits-for-denying-business-interruption-claims-220062.aspx

Lawyers File Multiple Class Actions Seeking Virus Coverage

By Gavin Souter | April 20, 2020

A group of law firms together filed six class-action lawsuits against insurers in federal courts from California to New York on Friday on behalf of commercial policyholders seeking business interruption coverage for coronavirus-related losses.

None of the policies contain a communicable disease exclusion, the suits allege.

In addition, another law firm filed two coronavirus-related class action lawsuits in a Pennsylvania state court on Friday.

The latest filings add to a growing tally of policyholder lawsuits against insurers seeking declaratory rulings that their policies cover income lost due to government-mandated business closures that began in March as various state and federal authorities sought to stem the spread of COVID-19.

Common themes in the dozens of suits include assertions that the presence of the coronavirus in or around a property constitutes physical damage under the terms of the policies and coverage is also triggered by the civil authority clauses in business interruption policies.

Insurer groups have generally held that coronavirus does not constitute physical damage and, therefore, coverage is not triggered.

In the latest batch of federal lawsuits seeking class-action status, policyholders represented by law firms DiCello Levitt Gutzler LLC in Chicago, The Lanier Law Firm PC in Houston, Burns Bowen Bair LLP in Madison, Wisconsin, and Daniels & Tredennick in Houston represent a variety of businesses including restaurants, a bakery, a bridalwear company and a dentist, in a variety of states. All of the law firms are listed as co-counsel on each of the suits.

The suits make similar allegations and hold that none of the policies have “any exclusion for losses caused by viruses or communicable diseases.”

The Insurance Services Office Inc. communicable disease exclusion was introduced about 15 years ago and is widely used.

The suits are: Gio Pizzeria & Bar Hospitality LLC and Gio Pizzeria Boca LLC v. Certain Underwriters at Lloyd’s, London in U.S. District Court for the Southern District of New York; Rising Dough Inc., et al. v. Society Insurance in U.S. District Court for the Eastern District of Wisconsin; Bridal Expressions LLC v. Owners Insurance Co. in U.S. District Court for the Northern District of Ohio; Caribe Restaurant & Nightclub Inc. v. Topa Insurance Co. in U.S. District Court for the Central District of California; Dakota Ventures, LLC d/b/a/Kokopelli Grill v. Oregon Mutual Insurance Co. in U.S. District Court for the District of Oregon; and Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Co. in U.S. District Court for the Northern District of Texas.

Aspen declined to comment; Society Insurance and Lloyd’s of London have previously said they don’t comment on litigation; Owners Insurance, Topa Insurance and Oregon Mutual did not immediately respond to a request for comment.

Meanwhile, also on Friday, a group of Pennsylvania personal injury lawyers filed two lawsuits seeking class-action status against Erie Insurance Group in state court in Pittsburgh. The two suits, Joseph Tambellini Inc. v Erie Insurance Exchange and HTR Restaurants Inc. d/b/a Siebs Pub v. Erie Insurance Exchange, assert that the all risks policies issued don’t exclude coronavirus-related losses.

Erie declined to comment.

The suits filed Friday follow a wave of coronavirus litigation by restaurants and other small businesses, a law firm in Los Angeles and various Chicago taverns.

Other suits filed this month include: one filed by various units of footwear company Marc Fisher Footwear Corp. in Moda LLC v. Hartford Fire Insurance Co. in state court in Santa Barbara, California, last week; a Tuscaloosa, Alabama, children’s shoe store in Wagner Shoes LLC v. Auto-Owners Insurance Co. filed in U.S. District Court for the Northern District of Alabama; a Redbank, New Jersey-based restaurant in Grand Cru LLC d/b/a Restaurant Nicholas v. Liberty Mutual Insurance Co. filed in state court in Freehold, New Jersey; a San Francisco-based restaurant in John’s Grill Inc. v. The Hartford Financial Services Group Inc. filed in state court in San Francisco; a Cleveland-based ice cream producer in Mitchell Brothers Ice Cream Inc. v. The Cincinnati Insurance Co.; a Cleveland-based restaurant group in Millennia Hospitality Group LLC v. The Cincinnati Insurance Co.; a Moreland Hills, Ohio-based clothing firm in Somco LLC v. Lightning Rod Mutual Insurance Co. The Ohio suits were filed in state court in Cleveland.

 

https://www.businessinsurance.com/article/20200420/NEWS06/912334128/Lawyers-file-multiple-class-actions-seeking-coronavirus-coverage-COVID-19#

6 Insurers Hit With Class Suits Over COVID-19 Coverage

By Mike Curley | April 17, 2020

Law360 (April 17, 2020, 7:52 PM EDT) — A group of attorneys from DiCello Levitt Gutzler LLC, the Lanier Law Firm PCBurns Bowen Bair LLP and Daniels & Tredennick launched class action suits against six insurance companies in federal courts on Friday over their denials of coverage for businesses shut down because of the COVID-19 outbreak.

The complaints target Certain Underwriters at Lloyd’s, London in New York, Society Insurance in Wisconsin, Auto-Owners Insurance Co. in Ohio, Topa Insurance Co. in California, Oregon Mutual Insurance Co. in Oregon, and Aspen American Insurance Co. in Texas, the attorneys announced in a press release Friday.

In each case, the businesses, which include bakeries, taverns, restaurants, nightclubs and bridal retailers, allege they paid premiums to the insurance companies for business interruption insurance for situations in which they could be forced to close through no fault of their own, but their claims have been denied.

“Businesses buy these policies and pay high premiums for these policies, for specifically this precise situation,” Adam Levitt of DiCello Levitt Gutzler LLC told Law360 on Friday. “It is unfortunate that after these policyholders have held up their end of their bargain with their insurers, that their insurers are unwilling to do the same.”

He added that the firms have been speaking to hundreds, if not thousands, of businesses that have been denied coverage, and Friday’s complaints are the first of what will become a series of actions to be filed in the coming weeks.

“We are looking into the claims of businesses of all sizes, each of which has had the uniform experience of getting their claims wrongfully rejected by their respective insurance companies,” Levitt said.

He added that he believes the courts will be able to certify the classes, because the companies experienced “uniform” courses of conduct by the insurance companies, under what he called “materially uniform” provisions in their policies.

While the complaints filed Friday are not the first class actions against insurers during the COVID-19 pandemic, Levitt said these cases are the “state of the art” claims in this issue.

In the complaints, the companies say their policies are “all risk” — policies that entitle them to coverage unless the policies specifically exclude the situation. They also cite “civil authority” clauses that provide coverage when their properties are made inaccessible because of orders from the government.

“Insurers will deny almost every claim — even the most legitimate ones — because that’s just how they operate,” Mark Lanier of the Lanier Law Firm said in a press release Friday. “But at the end of the day, this really is a straightforward issue about honoring their agreements. As our nation emerges from this horrific pandemic, businesses of all sizes will be critical to restarting the economy. In playing their usual claim-denial games, these insurers are threatening the welfare of not only small-business owners and their families but the entire U.S. economy.”

A spokesperson for Auto-Owners said they will address each claim and appropriately respond to the parties involved.

Spokespersons for Society Insurance and Aspen American declined to comment.

Representatives for the other insurance companies could not immediately be reached for comment Friday.

The class action complaints follow a slew of individual complaints against insurance companies, including Society and Lloyd’s, alleging businesses were wrongfully denied coverage of business interruptions because of government-mandated shutdowns during the pandemic.

The other suits include claims by a Chicago restaurant, a group of Chicago movie theater and restaurant owners, a D.C. restaurant, an Illinois dental clinic, a nonprofit professional theater in Indiana, a Florida sports bar, a scuba shop in the Florida Keys and a group of Texas movie theaters.

In addition, some states have introduced legislation to make the business interruption policies retroactively cover the COVID-19 outbreak, though attorneys representing insurers have told Law360 that such measures may be unconstitutional in restricting their freedom to contract.

The plaintiffs are represented by Adam Levitt, Mark DiCello and Ken Abbarno of DiCello Levitt Gutzler LLC, Mark Lanier and Alex Brown of the Lanier Law Firm PC, Timothy Burns, Jeff Bowen, Freya Bowen and Jesse Bair of Burns Bowen Bair LLP and Douglas Daniels of Daniels & Tredennick, as well as local counsel.

The cases are Gio Pizzeria & Bar Hospitality LLC et al. v. Certain Underwriters at Lloyd’s, London, case number 1:20-cv-03107, in the U.S. District Court for the Southern District of New York; Rising Dough Inc. et al. v. Society Insurance, case number 2:20-cv-00623, in the U.S. District Court for the Eastern District of Wisconsin; Bridal Expressions LLC v. Owners Insurance Co., case number 1:20-cv-00833, in the U.S. District Court for the Northern District of Ohio; Caribe Restaurant & Nightclub Inc. v. Topa Insurance Company, case number 2:20-cv-03570, in the U.S. District Court for the Central District of California; Dakota Ventures LLC v. Oregon Mutual Insurance Co., case number 3:20-cv-00630, in the U.S. District Court for the District of Oregon; and Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Co., case number 3:20-cv-00948, in the U.S. District Court for the Northern District of Texas.

–Additional reporting by Jeff Sistrunk. Editing by Janice Carter Brown.

 

Update: This story has been updated with case information for the Dakota Ventures complaint, and the responses from Society Insurance, Aspen American and Auto-Owners to a request for comment.

https://www.law360.com/insurance/articles/1264963/6-insurers-hit-with-class-suits-over-covid-19-coverage

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