First-Party Bad Faith Claims and COVID-19

Posted by Joseph "Joe" Amos on Apr 17, 2020 9:54:38 AM

COVID-19 Strikes Again…This Time in the Nation’s Courthouses

First-Party Bad Faith Claims and COVID-19

As the consequences of COVID-19 infections unfold – with already felt countrywide and global financial impacts – many U.S. businesses are scrambling to assess and recover income, resources, and “lost opportunities,” some simply to keep their doors open.

It shouldn’t surprise us then that many companies and industries are attempting to recoup losses through their insurance policies.

Also, not surprising is that many comprehensive general liability (CGL) “business interruption” insurance claims are being met with denial and rejection under a standard “pandemic” exclusion(s) to coverage.

But where there are intrepid, enterprising types, already and only a month or two into the U.S.’s corona outbreak, we see claims and theories emerging. 

So . . . cue some freshly minted COVID-19 litigation. 

COVID-19 Bad Faith Litigation

Recently, in Illinois, a group of Chicago-based restaurants and movie theaters were denied coverage by their insurer. In a multi-count complaint filed with the Northern District of Illinois, (Big Onion Tavern Group, LLC et al v. Society Insurance, Inc.) the Plaintiff group seeks a declaratory action and further alleges breach of contract and a statutory bad faith denial of insurance.

According to the complaint, the carrier’s bad faith practices showed failure to properly investigate the claim and a denial of coverage “only hours” after the claims were actually made.

Among other allegations, the complaint further states the pandemic-related losses should have been specifically excluded from coverage if Society actually intended not to cover such losses.

Florida Not Immune

Here, closer to our home, a COVID-19 case has already been filed in our sunshine state. A Florida-based sports bar (Prime Time Sports Grill, Inc.) has filed a declaratory judgment action in the Middle District of Florida against its insurer, Lloyd’s of London. 

In the declaratory action, Prime Time alleges its policy with Lloyd’s covers risks to business, and further, that the policy fails to specifically exclude COVID-19 related governmental closures.

Insurance companies, claims specialists, and risk managers should expect similar claims and arguments – like those above - to be increasingly made in the future.

Can we now expect more litigation in the vein of “bad faith denials of coverage,” based on an alleged cursory and “too quick” failure to investigate? 

How Will This Affect You?

Our coverage counsel team is happy to assist you. If you have any questions about:

  • These claims;
  • Florida’s codified, first party “bad faith” statute (F.S. 624.155);
  • If you have been served with a COVID-19 declaratory action;
  • Or, if you generally question your or your insured's available coverage(s)

Contact Fisher Rushmer today for help with COVID-19 first party, or any “bad faith” legal action. We can help you navigate these troubled waters.

Request A Consultation

* Research analysis and contribution also by Kaylin Martinelli

Topics: Bad Faith Claims, COVID-19

Posted by:
Joseph "Joe" Amos


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