Covid-Related Business Interruption Litigation Proliferates

The number of lawsuits being filed over Covid-related business interruption insurance is growing fast, according to a Moore&VanAllen alert. Dozens have been filed nationwide, including several class actions. Among the plaintiffs are restaurants, service industry businesses, and others. Some allege breach of the covenant of good faith and unfair business practices along with breach of contract. They generally rely on business interruption and civil authority provisions, some of which contain specific exclusions for losses due to a virus or bacteria, while some make no specific reference to viruses or communicable diseases at all. The insurers routinely rely upon policy exclusions, and argue that the virus does not cause “physical damage” that triggers coverage. Travelers has filed for a declaratory judgment that its policies do not require coverage. Federal legislation to provide a backstop for insurers is in the early stage.