April 10, 2020

Businesses across the country are filing suit against their insurers to determine coverage for their COVID-19 losses. The first such lawsuit, Cajun Conti LLC, et al. v. Certain Underwriters at Lloyd’s, London, et al., was filed by owners of a New Orleans restaurant on March 16, and since then, restaurants, movie theaters, and small businesses from California to Pennsylvania have followed. The plaintiffs generally seek declarations that their losses are covered, although some also bring breach of contract claims against insurers who have denied coverage. As we have noted, policies that provide business interruption coverage typically require suspension of the insured’s operations to be caused by “direct physical loss of or damage to property.” Some plaintiffs are already relying on language in orders from government authorities to support their case that this has been established – in Boutros v. Sentinel Insurance Co., for example, the complaint points to a stay-at-home order from Harris County Judge Lina Hidalgo, which states that “the COVID-19 virus causes property loss or damage due to its ability to attach to surfaces for prolonged periods of time.” We will be monitoring these cases closely as they progress.