Outrageous Denials of Pandemic and Business Interruption Insurance Claims More Business as Usual for Insurers

By Timothy Tomasik

On Sunday, April 19, 2020, the Chicago Tribune published the article “With Outbreak Comes Outrage”[1] describing how insurers are denying business interruption claims to a wide variety of businesses. Restaurant and theater owners expressed their outrage to the article’s author about the summary denial of their claims for loss by insurers.

The article did not explore the rights of insureds and the obligations of insurers to their insureds. Insureds are entitled to more than a perfunctory assessment of coverage. “Outrage” properly lies when insurers fail to give, at least, equal consideration to the insured’s interests as well as their own when interpreting the policy language. An insurer should not deny an insured’s claim without proper investigation and analysis of the policy language issued to the individual insured.

On Monday, April 20, 2020, the Wall Street Journal on page 1 published the article “Fight Over Pandemic Insurance Intensifies.”[2] The article discusses attempts by the restaurant industry to obtain coverage or otherwise have Congress provide a backstop for business interruption losses caused by the pandemic. The insurance industry was in not so rare form when taking advantage of statements by conservatives that attributed the legitimate efforts by insureds to obtain coverage to a trial lawyer’s plot “to line their pockets.”

Such assertions ignore the contractual obligation that insurers have to their individual insured, and it is ultimately the insured who receives compensation for a sustained loss. Insurers also ignore the contract interpretation rules that the restrictive terms of a contract must be read narrowly and against the insurer. Furthermore, any ambiguity in the policy language is interpreted against the insurer.

The courts have adopted the above rules of construction because the insurer drafts the policy language without input from the insured. Moreover, the insurer’s subjective intention when selecting the policy terms does not bind the insured. Rather, the words that the insurer utilizes bind the insurer. Similarly, insurers’ broad statements about the intended effect of coverage terms do not bind the insured. The insured is ultimately bound by the court’s interpretation of the policy language, not the insurer’s public relations campaign.

Insurers are making broad public statements about coverage to serve their own interests. The generalized statements by insurers about lack of coverage is a common tactic to dissuade the presentation of claims. Insurers made similar statements intended to discourage claims against airlines and security firms after 9/11.

Tim Tomasik served as one of the lead counsel on the Plaintiffs’ Executive Committee for the 9/11 litigation, and he helped secure a $1.2 billion settlement on behalf of small businesses and other clients for property damage and business interruption. The favorable result was not achieved without significant work over a period of time. One might say it was a marathon rather than a sprint, but our clients were satisfied in the end.

While not every claim for COVID-19 loss may prevail against an insurer, you will never recover on a claim you fail to present. If you do not make a claim, you are leaving behind not only the premium payment you paid for the coverage, but also the recovery to which you may be contractually entitled.

The present posturing by insurers is planned by sophisticated claim management, outside consultants, and attorneys who are pressing the message that there is no coverage.

Consider the fact that insurers advertise to get your premium dollars that you are in “good hands,” or “we know a thing or two” about claims, or they personalize your coverage so you “only pay for what you need.” Each advertising campaign is developed to make the insured feel that its coverage is personalized for the needs of the individual insured.

In contrast, after a catastrophic loss, the insurer makes a blanket assessment that there is no coverage. This statement ignores the premise that the policy was sold to address the needs of the individual policy holder. Therefore, you are an individual who purchases a policy but a member of a mass of greedy insureds when you might present a claim. This insurer tactic plainly ignores the duty an insurer owes to its individual insured to evaluate each claim on its merits.

The message from insurers is clear: we don’t want your claim, because there might be coverage, or we don’t want to do what you paid us to do – provide a full and fair assessment of your individual claim.

What insureds need now is competent and experienced coverage counsel to evaluate their individual policies to put the best light on any possible claim. Importantly, the terms of your policy control whether you recover for a loss, not what propaganda the insurance industry espouses by generalizations to discourage your claim presentation.

Watch this website for more detailed information and commentary. If you have any questions about making a business interruption insurance claim, contact us at 312-605-8800.

Attorney Tim Tomasik has gained a reputation as an accomplished trial lawyer throughout over 28 years of practice. He has represented clients in a wide variety of complex cases involving medical malpractice, aviation litigation, mass disasters, and premises liability, and he has recovered hundreds of millions of dollars in verdicts and settlements. While serving on the Plaintiffs’ Executive Committee for 9/11 litigation on behalf of small businesses and insurance companies, he helped secure a $1.2 billion settlement for business interruption and property damage.

[1] Chicago Tribune, Sunday, April 19, 2020, “With Outbreak Comes Outrage”, by Alexia Elejalde-Ruiz, Section 2, pgs. 1 & 3.

[2] Wall Street Journal, Monday, April 20, 2020, “Fight Over Pandemic Insurance Intensifies” by Brody Mullins and Ted Mann, pgs. 1 & 4.