There exists plenty of contention over whether business interruption losses from COVID-19 are covered under insurance contracts. Plaintiff lawyers representing business owners have promised to fight to make insurers pay, while insurance companies contend that policies of insurance do not provide coverage.

All the while, many of my business owner friends are struggling amidst adverse business conditions and are anxious to see how the legal wrangling of the attorneys will play out.

I am sorry to say it, but there will not be a quick resolution to this issue since business income claims for loss by COVID-19 will need to play out in each individual state, and ultimately in each states supreme court. Judges will be looking at past case law for similar rulings, which will largely inform them as to the present case before them. It is important to understand that a court’s integrity is rooted in the consistency of its rulings, always looking back, always citing similar cases that have been previously ruled upon.

Here are two cases, thought to be the first two rulings in the matter. One is the case of a restaurant in Michigan, and the second is a New York case involving an emergency request for preliminary injunction.

In Michigan, Judge Joyce Draganchuk of the 30th Circuit Court rejected the argument of the restaurant stating that “There has to be something that physically alters the integrity of the property. There has to be some tangible, i.e. physical, damage to the property”. One reporter stated that the judge’s interpretation of Michigan law is thought to be consistent with the approach of a majority of states.

In the other case, from New York, Social Life Magazine, Inc. v. Sentinel Insurance Co., LTD., a federal court denied an emergency request for preliminary injunction requiring payment of their COVID-19 claim while the case was being adjudicated. The judge, citing the 2002 case of Roundabout Theatre Co., Inc. v. Continental Casualty Co., held that the insurance language was very clear and unambiguously provided business income only in cases where the insured’s property suffered direct physical damage.

It is apparent, that the issue of what constitutes direct physical damage will be front and center in the cases being tried. In fact, in the Michigan case the judge commented that a property policy containing a virus exclusion would have barred coverage even if the claimants had alleged the virus caused the physical damage. In the New York case the court implied that the plaintiff’s damage was caused by the Governor’s stay-home order and not by any particular damage to the insured’s property.

I am sure that there will be a lot of legal maneuvering in each state as cases work their way through the court systems. We will do our best to keep you informed as news becomes available. We are your advocate and will do everything we can to keep you advised as things develop to help you secure the legitimate benefits you have a right to receive.