COVID-19 Stay-at-Home Orders are resulting in lost revenues to businesses in Indiana and Illinois, but insurers do not want to honor “business interruption” claims.
Usually, the majority of personal injury claims in Indiana and Illinois involve damages based upon bodily harm, like medical expenses, pain and suffering, and rehabilitation costs. However, in many accident claims as well as other types of injuries, claims are also made based upon property damage suffered by the injured victim.
A common example involves a motor vehicle accident, where the crash victim suffers extensive physical injuries but also experiences the very real harm of damage to his car, truck, SUV, or motorcycle. In severe collisions, the victim’s vehicle may be a total loss and irreparable. Those responsible for the crash are just as liable for the loss of property suffered by the accident victim as they are for his or her physical injuries and resulting costs of care, etc.
For a great many years, property damage has been recognized as a legitimate claim to be asserted by injured victims under the state laws of Indiana and Illinois.
COVID-19 Property Damage Claims: Business Interruption Losses
During the Coronavirus Pandemic, businesses in Illinois and Indiana and across the country have been forced to shut down if they are not categorized as “essential.” Even essential businesses are dealing with scaled-back operations. For more, read the Executive Orders of Illinois Governor Pritzker and Indiana Governor Holcomb.
Of course, this is causing a great many businesses across a variety of industries to suffer significant lost revenue. This kind of property loss is called a “business interruption loss.”
Business interruption losses are a type of property damage covered in most commercial insurance policies. Here, the business owner has had the foresight to pay for commercial insurance to protect them against losses caused by unexpected events, like a fire or a tornado, where there is an unforeseen, temporary halt to their business operations.
The language of the insurance policy will have language defining coverage to include “all risks of physical loss or damage.” Based upon this provision, business owners in Indiana and Illinois will be filing claims asking their carriers to cover their business interruption losses that have resulted from the Coronavirus Pandemic.
It is no surprise to victim’s advocates that the insurance industry is working hard to find ways to deny business interruption loss claims based upon COVID-19.
Insurance Industry Does Not Want to Honor Business Interruption Claims
The insurance industry has gone public with its intent to deny business interruption claims submitted because of COVID-19 losses. Last month, representatives of the industry wrote to Congress and explained that insurance companies are already planning to deny claims submitted by their commercial policyholders for Coronavirus Pandemic business interruption losses. For details, read “Insurers Reject House Members’ Request to Cover Uninsured COVID Business Losses,” published by the Insurance Journal on March 20, 2020.
Read the full text of the insurance response letter here, which includes the following rationale for not paying business interruption loss claims:
“Standard commercial insurance policies offer coverage and protection against a wide range of risks and threats and are vetted and approved by state regulators. Insurance coverage works by spreading risk, but that model simply cannot account for a situation in which losses are catastrophic and nearly universal. Standard business interruption policies do not, and were not designed to, provide coverage against communicable diseases such as COVID-19, and as such, were not actuarially priced to do so.”
Forcing the Insurance Carriers to Honor Business Interruption Loss Claims
The blatant denial of responsibility to cover “business interruption losses” under commercial insurance policies is so widespread within the insurance industry that some state legislatures (e.g., New York; Ohio; New Jersey; and Massachusetts) are considering passing laws forcing the insurance companies to honor these policy provisions. See, “N.Y. Introduces Bill on Pandemic-Related Business Interruption Claims,” written by Claire Wilkinson and published by Business Insurance on March 30, 2020; and “Will Legislation Require Coverage for COVID-19 Business Interruption Losses?” written by Chris Jones and published by the National Law Review on April 3, 2020.
While legislation may or may not be passed in these states, or in Illinois or Indiana, it is clear that an established route to justice exists under current state law. Lawsuits will have to be filed that allow courts to read and rule upon the matter, and confirm that “business interruption losses” in Indiana and Illinois are indeed covered by commercial insurance policy language defining coverage to include “all risks of physical loss or damage.“
Filing Lawsuits to Get Business Interruption Claims Paid by Insurers
This type of litigation is already going forward in other parts of the country. Business owners, as injured victims of the Coronavirus, are filing lawsuits in their state courts. They are asking judges (1) to rule that their insurance policies do, indeed, provide coverage and (2) to order the insurer to pay, covering their claim.
Businesses who are hard-hit here in Indiana and Illinois can expect to see denials of coverage when they file their business interruption loss claims with their carrier. These businesses are injury victims in much the same position as any accident victim dealing with a profit-centered insurer.
They, too, will need experienced and aggressive advocates with a clear understanding of how insurance companies work within a focus on maintaining and maximizing their own internal profits no matter how unjust or unfair.
In other words, the insurance industry does not want to suffer its own “business interruption loss” by honoring claims submitted by policyholders who have been paying premiums under the assumption they would be protected in the face of unexpected harm.
This leaves the business-policyholder little choice but to file a lawsuit in order to get their claim honored by their insurance company.
For more on Coronavirus-related Lawsuits, read:
- “Coronavirus Lawsuits and COVID19 Legal Claims in Indiana and Illinois: Wrongful Death or Serious Injury;” and
- “Deadlines for Injury Victims to File Lawsuits: Statutes of Limitations.”
For more on Insurance Company Bad Faith, read:
- Coronavirus Insurance Claims for Illness: Coverage for COVID-19 Bodily Injury and Claim Denials;
- “Bad Faith: When an Accident Victim is Victimized a Second Time by the Insurance Company”;
- “Insurance Company Has Duty to Settle Your Claim: Bad Faith Lawsuits Against The Insurer”; and
- “The Law of Bad Faith Insurance Claims in Indiana and Illinois.”
There are existing avenues for justice in both Indiana and Illinois for businesses who have been denied commercial insurance coverage of COVID-19 business interruption losses by their insurer. In these unprecedented times, our judicial system is an established forum for wrongs to be righted. Please be careful out there!
