Evan Greenberg, CEO of global insurer Chubb, in an April earnings call told investors that the insurance industry won’t budge on its stand against covering economic damages to businesses due to COVID-19-related government-mandated closures and restrictions. “The industry will fight this tooth and nail,” he said. “We will pay what we owe.”
At issue are the hundreds if not thousands of small to mid-sized businesses that have paid on their business insurance premiums month after month — in many cases for years — for protection in the event of a disaster. Due to city- and state-ordered closures, many restaurants, bars, salons, and other businesses have had to temporarily close or severely restrict operations, losing valuable revenue. They filed claims on their business interruption insurance — part of a business owner’s policy that provides coverage for payroll and other operating expenses in the event a disaster forces them to temporarily close — only to be denied.
Insurance companies claim that the disasters their policies cover include situations such as fires or hurricanes, in which physical damage to the business forces its temporarily closure. But they say viruses are not included since physical damages did not occur. In some cases, policies do have virus exemptions. But even insurers that don’t have those exceptions in their policies are trying to skirt responsibility.
Some plaintiff attorneys estimate insurance companies would have to pony up as much as $100 billion or more to provide the lifeline they promised their business clients — close to their liability from asbestos litigation three decades ago, Seeking Alpha reports. A Wells Fargo analyst predicted the business-interruption liability to be closer to $25 billion, which is about how much damage a Category 5 hurricane causes.
Either way, insurers are facing an uphill battle with businesses owners taking matters into their own hands and filing lawsuits against their insurance companies. Beasley Allen is actively pursuing cases with clients whose insurance companies denied their business interruption claims. Dee Miles, Head of our Consumer Fraud Section, Rachel Boyd and Paul Evans are spearheading this litigation for our firm. They would like to talk to you about any potential claims.