Leading US lawyers have warned there is a growing wave of plaintiffs looking to sue insurers as they seek to work around virus exclusion in business income/interruption policies.
Robert Cosgrove, Partner, Wade Clark Mulcahy, based in Philadelphia, Joe Zolopsky, Partner, with Glast, Philips & Murray in Texas, and André Gaudin, Partner, Burglass & Tankersley in New Orleans warned that plaintiff lawyers were seeking new ways in which to take insurers to trial over BI and liability claims.
Speaking in an on-line session organised by the International Underwriting Association for members of the London market, the trio said that many insurers had sought to use the fact that BI policies were there for physical damage which resulted in a loss of revenue as a reason for the policy not to respond.
Some had specific virus exclusions which they believed were such that the claims were excluded.
However, already claims were being filed which made it clear that claimants were looking to put though claims which avoided the virus as the cause.
Mr Cosgrove said that there were already cases which saw they were looking to use the clause which covered losses due to forced closure by civil authorities rather than the impact of the virus.
“When the created the policy, underwriters were not thinking of a global pandemic rather physical loss to storm, or flood for example,” explained Mr Cosgrove. “They take the view that if it is not a direct physical loss it is excluded in the policy.
However already in Louisiana there are moves to look at the physical loss being the fact that a person has infected the property with the virus.
“What we are seeing is claims which are for physical closure rather then the virus but around the fact that civil authorities have told them to close the property and with it the business.,” added Mr Cosgrove.
In terms of liability the lawyers said that at present the biggest test will be care home owners beg sued for the death of their residents under a claim that they have not taken adequate steps to protect the residents.
“IT is the biggest issue at present, however, as we see the restrictions lifted for people to return to work, we may well see similar liability claims made,” explained Mr Cosgrove.
Claims are already being received under the fact that policyholders were told they had an all risk policy and as such they had a reasonable expectation that all risk would be covered.
Mr Zolopski said: “Courts in Texas have been partially open so we have been able to get a snapshot of the type of attacks that the plaintiff lawyers will use.”
Mr Cosgrove added: “There has been much said about that fact we have not seen any claims in New York. That is because the courts are all closed so no actions can be filed.
“However, when they reopen, we expect there will be a flood of claims.”