A longtime Tuscaloosa, Alabama, business is taking its insurance company to court for not covering its business interruption claim when it was forced to close to stop the spread of COVID-19.
Wagner’s Shoes has been in business more than 60 years. In late March, Gov. Kay Ivey ordered all non-essential businesses in the state to close due to the coronavirus. Tuscaloosa Mayor Walt Maddox issued a similar order for the city one day before. After Maddox closed Tuscaloosa, Wagner filed a business interruption claim with its insurer, Auto-Owners insurance. Almost immediately, the claim was denied and Wagner filed a Declaratory Judgment Action lawsuit to find out if the court found the claim to be valid under the policy.
Business interruption insurance is part of a business owner’s policy that provides coverage in the event a business has to close temporarily due to a disaster, such as a fire or tornado. The pandemic presented an unusual situation. Insurers were denying claims saying viruses are not covered. Their reasoning is that the pandemic didn’t cause physical damage to the business that forced its closure. But the businesses argue government-mandated closures were beyond their control and insurance companies need to do the right thing and cover struggling businesses.
Wagner’s later updated its lawsuit against its insurer to include breach of contract, bad faith, and institutional bad faith.
Beasley Allen lawyers are actively investigating and filing similar claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic, and are involved in advocating for consolidation of these actions in an MDL. Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd, and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise.