Inside the List: Insurers have advantage in pandemic-related business interruption lawsuits

Posted on April 09, 2021
Headshot of Steven Marks
Steven C. Marks

By Jessica Bryant  –  Data Reporter, South Florida Business Journal, Apr 9, 2021, 7:12am EDT

Steven Marks was unsurprised as Podhurst Orseck saw a surge of insurance lawsuits over the last year. He’d predicted just that back in May as businesses continued to experience financial loss as a result of Covid-19.

What he couldn’t know at the time was how judges would rule on these many cases.

“So far, it’s been a mixed bag,” he said. “A lot of the federal judges in the Southern District of Florida have been ruling against the insured, [instead] finding favor with the insurers that there is no physical loss.”

Marks and his peers at the firm disagree with the decisions but have since held off filing additional cases in federal court while some of their cases make their way up to the appellate courts.

“Ultimately, it’s going to be determined by the appellate court as to what constitutes physical loss and property damage,” Marks said.

Business interruption insurance policies vary. Some policies state that they provide coverage for any business loss, while others have specific exclusions, often including viruses.

“What’s … hard to understand is when a company issues a policy that clearly has a virus exclusion and charges one premium and offers a different customer a policy that does not have a virus exclusion and has a higher premium but then says, ‘you’re not actually covered for this event,’” Marks said. “It’s really a very unfair situation.”

Still, Marks is hopeful that the appellate courts will rule in favor of the insured.

What’s most clear to Marks now is that the insurance industry has been forever changed by these types of cases.

“I think moving forward [insurers] are going to be way more careful in clearly excluding virus coverage,” he said. “And in policies… when someone wants to have pandemic or virus coverage, [the language] is going to be much more explicit to say you must show property damage.”

Marks recommends that businesses get brokers who can represent them and their interests to be insured. These brokers should understand their policies in detail, while also making sure there is no wiggle room on the language where higher premiums are being paid.