State Judge Rejects Michigan Restaurants’ COVID-19 Business Interruption Claim

By | July 7, 2020

  • July 7, 2020 at 2:04 pm
    CL PM says:
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    Easy conclusion for the judge to reach if you read the policy language. I wonder if the plaintiff attorney sold the insured on their ability to convince the judge or if the insured insisted on suing despite being told they had no chance.

    • July 7, 2020 at 3:48 pm
      cicero says:
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      probably a little of column a, a little of column b, I’d imagine

    • July 8, 2020 at 8:36 am
      Christy says:
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      Not a lawsuit, but a client of my agency was told there was no coverage under the business policy for loss of income due to COVID-mandated closures by the governor. They decided to file a claim anyways, to protect their interest if something was decided in the court system that overruled the insurance policy. They got a formal letter a few days later denying the claim.

  • July 7, 2020 at 2:45 pm
    Ryan says:
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    • July 7, 2020 at 9:54 pm
      Steve says:
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      Virus is specifically excluded. Irrelevant though as the policy language specifically states there must be property damage for coverage to become available. If the policy language actually is as direct as the judge stated, then the ruling is correct.

      Personally, I suspect the insurance policy was issued with multiple endorsements (each mailed separately) that add or subtract words, sentences paragraphs that completely change various terms of the policy. In that case, I would hope an argument could be made that the complete policy fails to state coverage in plain language.

      • July 8, 2020 at 12:38 pm
        Ryan says:
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        • July 8, 2020 at 2:35 pm
          Ryan2 says:
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          You speak in absolutes, Ryan. I disagree.

          Certainly, this is a minority pleading approach that “direct physical loss of or damage to property” includes a loss of use. I think it was a mistake for the plaintiff’s attorney to plead that the virus was never on the property (could have been silent). This pleading approach, in all cases I have observed using it, is because plaintiffs are attempting to avoid the virus exclusion that is in their policy. It is done intentionally by plaintiff’s counsel and not by happenstance. This pleading approach attempts to suggest that the virus is not the proximate cause of the loss of use, but rather government closure orders. I have hard time believing courts are going to ignore the virus floating around. So, if you mean that this decision has not decided all issues, you are right.

          But it will pose challenges to a large quantity of plaintiffs (something like 80% of these policies have the virus exclusion). Those that have chosen to allege “direct physical damage” due to contamination of their property with the virus will directly face the virus exclusion. There is also the issue of the period of restoration and when the contamination should have hypothetically been wiped with a Lysol wipe and thus “repaired” (rendering the common meaning of terms like repaired etc. etc. essentially useless when its merely cleaning surfaces). “By no means a groundbreaking decision” is wrong. “The policies themselves and the jurisprudence interpreting the policies have not mandated actual damage” is incorrect when posed as a blanket statement as you have.

          • July 10, 2020 at 11:11 pm
            ryan says:
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            Again, I was referencing standard ISO policies that do not contain a virus exclusion. I am keenly aware of a case (no suit has been filed yet) where a principal of several LLCs contracted COVID and was physically in the insured premises a week before being diagnosed with COVID. Additionally, the diagnosis came right around the time the person shut down his businesses because of COVID-19. Several employees likewise contracted the virus. I strongly believe that if forced to litigate, the court will find the insured business locations suffered a “direct physical loss” because of COVID-19. I believe the notion that none of these claims will succeed, regardless of the facts, is wrong. I would not be surprised if some insureds not only succeeded on the breach of contract claims, but were also awarded penalties.

          • July 20, 2020 at 10:58 am
            Beth says:
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            This comment is directed Ryan:
            Point of Information – ISO Property rules have the virus exclusion as mandatory, in BOP it is in the form. It has been this way since 2006.
            Please check your facts.

  • July 7, 2020 at 2:47 pm
    John Varca says:
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    Gratifying that the judge echoed what the industry has been contending since the BI claims were first lodged.

  • July 7, 2020 at 3:46 pm
    cicero says:
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    great opening argument from the defendant attorney tbh

  • July 7, 2020 at 3:47 pm
    cicero says:
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    great opening argument from defendant attorney tbh

  • July 10, 2020 at 8:47 am
    jason kim says:
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    plaintiff attorney’s argument was laughable when the judge pointed out about the way he devised his own definition of property damage…”because business was forced to close, and because there was no physical presence of customers in the restaurant, that would be considered direct physical damage”… covid19 is making people do unthinkable things…

  • July 19, 2020 at 12:23 pm
    ScottW says:
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    Very Interesting

  • July 20, 2020 at 1:21 pm
    Exadjuster says:
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    “But my policy says ‘all risk.'” lol



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