Business Interruption Claims in the Second Year of COVID-19

At this time last year, Americans were only beginning to grasp the magnitude of COVID-19, not only physically – but economically. No one at the time could imagine the extent as to which the COVID-pandemic would uproot society, affecting big corporations but ravaging the small bricks and mortars at the backbone of our communities. Leaving few industries unscathed, the spread of the virus has caused tremendous damage and continues to threaten business ranging from the hospitality industry to retail to the entertainment industry. 

Through a long and dismal year, the largest category of coronavirus-related lawsuits where those brought by various businesses against insurance companies stemming from the carriers’ denial of claims for lost business income. Last year, as governments began ordering restaurants and retailers to close their doors to reduce the spread of the virus, business owners sought coverage from their insurance carriers. After the claims were summarily denied, business owners filed lawsuits demanding coverage consistent with the terms of their policies.

As we enter the second year of the coronavirus pandemic, here is what you need to know about business interruption lawsuits and how Meyers & Flowers is helping small, local businesses navigate this uncharted legal territory as we fight back against major insurance corporations.

What is Business Interruption Coverage?

Business interruption coverage is primarily intended to compensate an insured for its income lost due to the shutdown or slowdown of business operations caused by the physical loss, damage, contamination, or destruction to insured’s property. Before COVID-19 this would typically entail events such as a fire or natural disaster. Many policies, however, also provide coverage for viruses and other airborne pollutants. This coverage assists an insured in covering its operating expenses, payroll, taxes, loan payments, and other expenditures that continue to mount despite a businesses’ inability to operate normally. 

Who filed Business Interruption Claims?

Following “non-essential business” closure orders mandated by the state, businesses were forced to cease their operations – through no fault of their own – presenting an existential threat to the livelihood of their small, local operations. As the consequences of the pandemic set in and businesses began to face massive losses, Chicago-area businesses turned to their insurance providers for relief.

Restaurants, retail stores, hotels and other organizations filed business interruption claims with their insurance agencies that would allow them to avoid mass layoffs and cover other business-related expenses. Despite the insurers expressed promise in its policy to cover business interruption losses when the government forces a closure, the providers issued blanket denials for coverage – often within hours of receiving their claims. 

Meyers & Flowers Files Numerous Lawsuits on Behalf of Chicagoland Businesses 

In efforts to enforce compliance with the terms of their insurance policies, businesses sought out the help of the seasoned trial attorneys at Meyers & Flowers. Represented by Partners Peter J. Flowers and Michael W. Lenert, Chicagoland restaurant Hampton Social and their cocktail lounge, the Bassment, were among the first to file claims in Illinois, initiating what would later become a long string of lawsuits to follow. Meyers & Flowers continued to take on cases representing numerous businesses throughout Illinois. 

The suits allege that commercial insurance carriers have wrongfully denied the business interruption claims of deserving businesses in violation of the explicit terms of their insurance policies and further violated the requirements of Section 155 of the Illinois Insurance Code. 

Insurers Preemptively Denying Claims

Meyers & Flowers is not only claiming that insurers blatantly breached their obligations to provide coverage for losses incurred due to a “necessary shut down or suspension of their business operations,” but categorically rejected claims without first conducting any meaningful coverage investigation as required under Illinois law. To make matters worse, some carriers directed their agents to make sham claim denial notifications before policyholders even filed their claims, a plan to discourage their insureds from pursuing coverage. 

What is Happening with Business Interruption Lawsuits Now?

While the pandemic drags on, the economic losses suffered by our clients continue to mount. Despite the clear language of their policies and the devastating economic damages suffered by their insureds, insurance companies across America continue to blanketly deny any coverage associated with COVID-related lost business income. In support of their denials, insurance companies have raised various arguments for dismissal of these lawsuits, including that their insureds were able to perform “minimum basic operations” which did not halt their operations, and the argument that the presence of COVID-19 does not result in property loss. The Meyers & Flowers team continues to aggressively prosecute these claims and looks forward to establishing that the carriers breached their respective policies and consequently vexatiously and unreasonably denied coverage to their deserving insureds.  

In 2021, we expect to see many more lawsuits brought against insurance carriers across the country stemming from their denial of business interruption coverage. The attorneys at Meyers & Flowers are prepared to pursue claims against insurance companies for their calculated coverage denials. If you believe Meyers & Flowers can help your business, one of our attorneys would be happy to discuss your particular case at no charge. Please contact our legal team at [email protected] or 877-221-2511 or request a free initial case evaluation.