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Commercial Insurance Policies and “All-Risk” Coverages for Losses During COVID-19 Pandemic

Recently, this law firm published a legal briefing on anticipated issues with business interruption insurance coverage stemming from COVID-19 shutdowns (a copy of that legal briefing can be found by clicking this link). Already, multiple businesses have filed lawsuits against their insurance carriers seeking declarations compelling them to provide coverage for COVID-19 related losses.


Last week, a New Orleans restaurant filed suit against its insurance carrier, seeking a declaration that any losses resulting from government-mandated COVID-19 closures would be covered under its “all-risk” policy (Cajun Conti, LLC et al. v. Certain Underwriters at Lloyd’s of London, et al. [La. Dist. Court, Orleans Parish]). Specifically, the Plaintiff/Petitioner argued that there was no exclusion in the policy for losses resulting from a virus or global pandemic. Plaintiff/Petitioner seeks a declaration that in the event the government mandates closure of its restaurant (similar to the Executive Order issued last week by New York State Governor Andrew Cuomo), that its losses would be covered under the policy.


On March 24, 2020, the Choctaw Nation and Chicasaw Nation in Oklahoma also filed lawsuits seeking declaratory relief substantially similar to the New Orleans case. The Choctaw and Chickasaw Nations sued their respective insurance carriers claiming that their “all-risk” policies covered business interruption, interruption by civil authority, limitations of ingress and egress, and other related expenses of the state-mandated closure of their casinos. The Nations argue that as a result of the COVID-19 pandemic, their property has been damaged and cannot be used for its intended purpose.


The common denominator in these recently filed cases is the insured’s purchase of an “all-risk” policy. An “all-risk” policy is a type of policy that automatically covers losses resulting from any risk that is not specifically excluded. The insured must show that there was a direct physical loss or damage to the property, at which point the burden shifts to the insurance carrier to demonstrate that the event causing the loss or damage is excluded under the policy.


Typically, “all-risk” policies cover physical property damage and loss. However, a number of courts have previously held that, under such policies, physical damage and loss is not limited to tangible and structural damage. Courts have found that where a building becomes uninhabitable due to noxious fumes, gases, or bacteria, property loss and damage exists. Where physical damage is undefined or ambiguous in the policy, courts have construed the term liberally in favor of the insured.


These recently-filed cases showcase the need for all businesses impacted by COVID-19 to immediately review their insurance policies, evaluate and itemize the losses suffered with appropriate documentation, provide notice to their carriers, and take the necessary actions to mitigate the “loss” or “damage” suffered. Consulting with an attorney now could save considerable time, resources, and money in the future and preserve your legal rights.

Our firm has extensive experience reviewing, arbitrating, and litigating insurance agreements. If you have any questions about this legal briefing, please contact any member of the Firm at 585-730-4773.

This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2020 Law Offices of Pullano & Farrow PLLC

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