More than 1,500 business interruption lawsuits have been filed across the country since the start of the pandemic a year ago.
Insurers have won the majority of the 238 decided after motions were filed to dismiss or for summary judgment, according to figures compiled by the University of Pennsylvania.
In 151 cases, the courts ruled in favor of the insurers by dismissing the suit or granting summary judgment, while 87 were allowed to proceed..
Most of the arguments in the cases taken by businesses, including restaurants, hair salons and dental surgeries, centers on what exactly constitutes physical loss or damage that are included in business interruption policies.
Traditionally, the policies covered fire and storm damage, and some insurers have included virus exclusions in more recent years, but many did not. And arguments over the latter ones are in dispute.
Rulings in favor of policy holders have found that they can proceed with the phrase “physical loss of or damage to” includes the loss of use, possession, or habitability of the property. Those favoring insurers found that “physical loss of or damage to” actual harm or physical alteration.
One of the most keenly watched case will be heard in a Western District of Missouri federal court. It is proceeding after a ruling last August in favor of the policy holder.
In Studio 417, Inc. v. Cincinnati Insurance Company, the court allowed the case to proceed as it was not persuaded that physical loss or damage “requires actual, tangible, permanent, physical alteration of property.”
The court found that the policies, taken out by a group of nail salons and restaurants, covered physical loss could mean through being forced to suspend operations because of the virus.
Then in December Zwillo V, Corp. v. Lexington Insurance Co,. a ruling in the same district but by a different judge agreed with the insurer that the allegation that COVID-19 and stay at home orders cannot mean "direct physical loss of or damage to property."
The Chicago-headquartered National Restaurant Association, in its Blueprint for Restaurant Revival, is calling on the government to address business interruption insurance claims going forward, including a backstop for pandemic insurance.
"Before the COVID-19 pandemic, some commercial insurance policies contained exceptions for business interruption or other losses due to a pandemic," the organization said.
"But countless policies that did not contain such exceptions have been consistently and improperly denied by insurers, resulting in a growing list of state and federal lawsuits.
"The refusal of coverage by insurers has proven devastating for some businesses and their employees. Without federal support, pandemic insurance will be very expensive and difficult to find, putting it out of reach for most businesses."