Small businesses, corporations, and franchises across the country have suffered severe business interruptions as a result of government-imposed coronavirus closures.These interruptions have caused significant financial losses that have left many businesses shut down or unable to return to business as usual pre-pandemic.
In an effort to recover a fraction of what was lost, business owners have started to submit coronavirus interruption insurance claims without much success.
Restaurants, gyms, a Las Vegas resort, and most recently 15 minor league baseball teams have all filed coronavirus business-interruption claims only to be denied by their insurer. Instead of accepting the denied claims, lawsuits are being filed seeking damages for alleged breaches of contract. In light of all these new lawsuits, what reasons have attorneys been submitting to prove a breach of contract occurred?
Breach of Contract Arguments
When an insurance provider breaches a contract, it is the same as breaking a contractual obligation or agreement. Recent breach of contract lawsuits filed by business owners are the result of a business owner believing that their business-interruption claims are being wrongfully denied even though they have met their obligation by paying for their annual premiums.
Insurance companies counter that there is no breach of contract for the following reasons:
- COVID-19 business-interruption losses are not the result of direct physical loss or damage to property
- Policies include language excluding coverage for loss or damage caused by viruses
COVID-19 Breach of Insurance Contract Lawsuits
The wrongful denial breach of contract lawsuit filed by Treasure Island (TI) Las Vegas’ attorney claims the resort is entitled to payment for damages from Affiliated FM Insurance Co. (AFM) because of unforeseen loss or damage that resulted in loss of income because of a communicable disease. More specifically, TI’s attorney argues it is entitled to up to $850 million in property damage and $327 million in business losses due to the government COVID-19 forced closure and subsequent cleanup.
AFM denied coverage, stating that “contamination doesn’t cause physical damage.” Further, the insurance provider stated it was their understanding that TI was not aware of any employees infected with the virus, nor whether the virus was present at any of the locations when the claim was filed. AFM was also of the understanding that there was no physical damage or loss to “Insured” property at the location.
Similar to TI, the attorneys who filed the breach of contract lawsuit on behalf of MILB teams claim that the loss of use of their ballparks due to government restrictions on fan gatherings and their inability to obtain players qualifies as physical loss. In fact, these losses of income are directly related to COVID-19 closures that are now causing teams to scramble to cover $2 million average expenses, to include as much as $1 million in ballpark lease payments, salaries and benefits for permanent employees, food and beverage supplies, and marketing costs.
How Lerner and Rowe Business Claims Attorneys Can Help
The recent upswing of confirmed cases reaffirms what public health experts keep saying, the coronavirus continues to spread. With no future end in sight, business-interruption losses will also continue to rise.
At Lerner and Rowe Business Claims, our experienced attorneys are ready to review your current business insurance contract. We will then go over your options to discuss whether or not you may have a claim.
It may be within your best interests to file a lawsuit to seek compensation because your contract has been breached. Alternatively, it may be possible to negotiate a different agreement with your insurance provider.
Contact us now to learn more about the free insurance contract reviews our team offers.