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ST. LOUIS RECORD

Friday, March 29, 2024

Few inquiries to insurance director over business interruption, but Missouri companies join lawsuits

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Missouri's insurance department has received 12 inquiries and six other telephone calls related to business interruption coverage and the COVID-19 outbreak.

But none of the contacts were treated as formal complaints as it was "clear that there is no coverage under the inquirer's policy," according to the Missouri Department of Commerce and Insurance.

However, lawsuits have been filed by Missouri companies complaining that they should be covered because the policies did not specifically exclude coverage during a pandemic.

Missouri businesses have also joined multi-district litigation in Pennsylvania and Illinois, according to reports.

"Since March 1, the Department has received 12 inquiries and 6 phone calls related to COVID-19 and business interruption/business income loss," Lori Croy, director of communications with the department, told St. Louis Record.

"Those have been handled as inquiries instead of complaints because it’s been clear that there is no coverage under the inquirer’s policy," Croy added.

Director Chlora Lindley-Myers  has indicated that "due to the small number of inquiries the Department has received, it is noted in the policy coverages reviewed specifically that those policies did not provide coverage for the exposures sought," the director of communications added.

"No premiums had been contemplated or collected for the peril and an coverage for such perils had been excluded."

In the actions filed in Pennsylvania and Illinois, the plaintiffs seek declaratory judgments and damages for breach of contract and bad faith.

Business from 28 states and District of Columbia have joined the actions, including six from Missouri, according to reports from last month.

Industry organization, the American Property Casualty Insurance Association, said that if the actions are successful, they will destroy the insurance industry.

“Pandemic outbreaks are uninsured because they are uninsurable,” the organization told Law360.com.

“Commercial and business interruption policies are not underwritten to include the risk of viruses, reinsurance is not purchased to cover viruses, and premiums are not calculated or collected to include viruses,” the APCIA said in a statement.

In a multi-district action filed in federal court in the Northern District of Illinois, the plaintiffs want a declaratory judgment ordering the insurance company to pay the insurance claims and damages for breach of contract and bad faith.

It is claimed that pandemics are not mentioned in the policies, the claims were turned down without investigation, and they should be covered under "all-risk" provisions.

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