Key Decisions and Strategies in Pursuit of Insurance for Losses from COVID-19

Finley Harckham, senior litigation shareholder with Anderson Kill, discusses tips on how policyholders can successfully bring claims to their resolutions.

Many businesses and other entities have submitted insurance claims for business interruptions and extra expenses stemming from the disruption of their businesses by COVID-19. Whether these claims stem from the presence of the virus on the policyholder’s own property or the property of customers or suppliers, or result from government orders impairing access to insured locations or other properties, the vast majority of policyholders have received either flat-out denials of coverage or requests for very specific and sometimes voluminous information. Those demands come even though in all likelihood the insurance company intends to deny coverage based on the simple argument that COVID-19 is not property damage, or that viruses are excluded under the policy in question. The lengthy information requests and the effort required to comply with them likely serve no purpose other than to allow the insurance company to assert that it investigated the claim.

Either situation, a blanket denial or an information request, can leave the policyholder wondering how, if at all, to pursue the claim. The following tips can help policyholders bring a claim to resolution as quickly as possible and with the greatest chance of success.

1. Obtain an Expert Evaluation of Your Coverage

Pursuing coverage for COVID-19-related losses will likely be time-consuming and expensive. It is therefore fundamentally important for policyholders to obtain an expert evaluation of their coverage and the likelihood of prevailing. Many policyholders have so far avoided this step by submitting very simple and general statements to their insurance companies that they have suffered loss from COVID-19. That can be a prudent first step, particularly because the scope and extent of most losses is not yet known. The response to such a notice might be a denial of coverage or, perhaps more likely, a request for information supporting the claim. In either event, the policyholder is not left with a clear idea of whether the claim is worth pursuing....