Business Interruption from COVID-19
Business owners throughout the country are bringing their insurers to court seeking damages for business interruption as a result of nationwide lockdowns and closures.
UPenn Law recently created and published the Covid Coverage Litigation Tracker which essentially tracks the total number of case filings for business interruption claims resulting from closures and lockdowns throughout the past few months.
The litigation tracker shows that these types of cases continue to rise exponentially as businesses continue to suffer from the aftermath of nationwide shutdowns. According to UPenn, the number of business interruption cases against insurers reached 1,288 cases as of October 5, 2020.
After a recent ruling from a North Carolina court, these numbers may continue to rise rapidly. According to Insurance Journal, Superior Court Judge Orlando F. Hudson Jr. ruled that there was a “direct physical loss” resulting from business closures of local restaurants in the Raleigh-Durham area of the state.
What Does This Mean for Businesses?
This is a significant development because this may be the first favorable ruling for business owners that have been affected by mandatory business closures this year. If this trend continues, it will be a massive win for business owners throughout the country. However, it is not set in stone just yet.
While the law behind this legal dilemma is quite complex, it will be crucial to see how this narrative develops over the next few months and years. We have never seen a development of this magnitude where businesses nationwide were required to close their doors indefinitely without knowing when they would be allowed to reopen. Thus, it is difficult for courts to make legal conclusions when there is hardly any precedent as a basis for their decisions.
Impact on Insurance Companies
Businesses have been severely impacted by lockdowns and closures this year, but that does not mean that insurance companies are willing to hand over the money just yet. In fact, insurance companies will fight as much as possible to avoid making payouts to businesses, since the amount of lost revenue from closures is enormous.
We have already seen the damage that business closures have had on businesses nationwide: U.S. gross domestic product (GDP) decreased 31.4 percent in Q2, which represents April, May and June 2020. This amounts to decreases of more than $2 trillion in just three months.
Although GDP spiked 33.1 percent in Q3 (July, August, September), tens of thousands of businesses permanently closed their doors nationwide. Yelp estimated in its recent Local Economic Impact Report that nearly 98,000 business have closed permanently since March, with over 65,000 more that are still closed indefinitely.
What Can I Do as a Business Owner?
If you are interested in pursuing a claim against your insurer for business closures, we may be able to help. Contact us today by email or phone for a free consultation to determine your rights for business interruption claims against your insurance provider.
Vernon Litigation Group represents businesses and individuals throughout the United States with financial disputes, including insurance litigation, FINRA arbitration, cyber litigation, securities litigation & arbitration, financial advisors & employment disputes, and business & commercial litigation.