Articles Posted in Business Interruption

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GettyImages-1316394221-300x200IKEA’s Billy bookcase—so popular that one is reportedly sold every 10 seconds—recently got even cheaper, at least for Russians. IKEA is holding a fire sale as the company closes its stores and exits the Russian market. The Swedish furnituremaker’s exit from Russia is just the latest in a string of actions by over 1,000 companies—including Disney, Goldman Sachs, IBM, McDonalds and Starbucks—that are curtailing operations in the country in response to the Russia/Ukraine conflict. As of June 2022, global companies fleeing Russia have reportedly racked up more the $59 billion in losses associated with their departure. Of course, this pales in comparison to the more than 10,000 civilian casualties and $600 billion in economic losses that Ukraine has suffered since the conflict began. But even though the corporate exodus from Russia for many companies is voluntary (and has even been used by some as a positive public-relations spin), Russia has threated to confiscate Russian-based assets of companies from countries that Russia considers hostile to its interests, and U.S. and EU sanctions may practically serve to prohibit some companies from operating in Russia, all of which highlights that additional risks lie ahead.

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On July 13, 2022, the California Second District Court of Appeal issued a published decision reversing a trial court’s dismissal of a policyholder’s COVID-19 coverage claim. In Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund Insurance Company, the Court took two remarkable steps in the context of nationwide COVID-19 litigation. First, the Court recognized that courts must accept as true properly alleged facts when deciding a pleading challenge. Second, the Court did not merely recite the long-established rules of construction for insurance policies that apply in California and most states; rather, it followed those rules by engaging with the actual policy language.

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GettyImages-896761628-300x200The frequency and severity of cyber incidents, particularly ransomware attacks targeting businesses and critical infrastructure organizations, have been on the increase and are unlikely to subside anytime soon. Higher claim counts and loss severity have led to significant and continuing increases in cyber insurance losses. Insurers have made up for this increased risk profile by passing the costs onto consumers in two ways—by both increasing premiums and attempting to narrow coverage.

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A recent article in Law360 shines a spotlight on an Amended Complaint filed by Pillsbury’s award-winning Insurance Recovery and Advisory Group in a significant insurance recovery action seeking coverage for COVID-19 business interruption. In it, the Amended Complaint is described as a “beefed-up filing” where our colleagues have “unleashed a deluge of scientific studies on COVID-19.” The article  suggests that the “the arguments outlined in Tuesday’s filing could be a potential avenue around Mama Jo’s v. Sparta Insurance Co., a heavily cited decision in which the Eleventh Circuit held that policyholders must show their properties required physical repairs to constitute direct physical loss. A number of insurers have pointed to that ruling in shooting down COVID-19 insurance cases.”

For more information on this or related issues, please contact Joseph JeanScott GreenspanBenjamin Tievsky or Janine Stanisz.

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As those who experienced the Texas winter storm crisis are likely discovering, vital questions of coverage and recovery linger—and in some cases, first appear—long after the ice has melted and power has been restored. In “Texas Winter Storms: Evaluating Business Interruption Claims Following a Large-Scale Disaster,” Joseph D. Jean, and Tamara D. Bruno examine some of the challenging questions about business interruption insurance coverage raised in the aftermath of the storms.

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COVID-19-limitations-1289785555-300x200The United States declared a national emergency in response to COVID-19 on March 13, 2020, and states quickly followed with stay-at-home orders that impacted businesses and institutions nationwide. It has now been nine full months since the pandemic emerged in the United States and businesses began to shut down in the face of contamination and civil authority orders effecting restrictions on access to and use of their premises.

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1263108909-covid-19-colleges-300x200Like many businesses, colleges and universities across the country have had to dramatically alter their operations in response to the coronavirus pandemic. Most students completed the spring 2020 semester through online instruction after campuses closed in response to rising infection rates and government shutdown orders. According to the Chronicle of Higher Education, roughly one-quarter of institutions of higher education are providing instruction this fall semester either fully or primarily in person, one-quarter are using a hybrid model, and the remainder operating fully or primarily online.

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GettyImages-1190580076-wildfire-300x200One word that aptly describes the devastation that is 2020 is “relentless.” The COVID-19 pandemic has caused both personal and economic suffering throughout the world for over six months. Against the backdrop of the already devastating effects of COVID-19, several regions in the United States have recently experienced powerful storms and historically large wildfires. The wildfires in the western United States and Canada have been especially catastrophic this year—burning millions of acres, forcing evacuations, damaging air quality, and creating blankets of smoke extending over much of the country. The fires have destroyed homes and businesses and will lead to hundreds or thousands of insurance claims under homeowners, commercial property, and business interruption policies.

What happens under First Party Property/Business Interruption insurance when more than one arguably covered cause of loss impacts a business at the same time?

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GettyImages-1150199388-movie-scaled-e1601649667239-300x226His daughter missing and a secret government program uncovered

Ben Affleck’s detective thriller Hypnotic was next in line to be on the actor’s list of blockbuster films. That is, until the COVID-19 pandemic halted the film while it was still in pre-production. To insure against such business interruption risks and delay, Hypnotic’s production company, Hoosegow (Hypnotic) Productions Inc., had purchased a Film Producer’s policy from Chubb National Insurance Company.

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As the COVID-19 public health crisis continues to surge globally, insurers have closed ranks behind the position that commercial property policies are “not designed” to cover pandemic-related losses, including business interruption. But the various justifications they advance for this assertion often collapse under scrutiny of the relevant policy language. Insurers have taken an early stand on the threshold issue of whether the actual or threatened presence of coronavirus and/or COVID-19 can even trigger coverage as a matter of law, telling both their insureds and the courts that the virus’s presence does not constitute “physical loss of or damage to property,” the event typically required for property policies to respond.

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