Business Interruption Lawsuits are Just Beginning

By Jeff S. Smith, CIC, JD, CAE, Chief Executive Officer of OIA


Unfortunately, it looks like we are starting a trend of Business Interruption (BI) lawsuits pitting business owners against insurance agents and companies. We expect to see many lawsuits and news articles about Business Interruption losses in the coming months.

It is another reason why OIA and Big I National are advocating for a comprehensive federal solution as the best approach to restoring businesses efficiently and effectively. The way to relieve some of the pain for business owners and put an end to the false hope and highly speculative lawsuits trial lawyers are filing is to get Congress to enact the COVID-19 Recovery Fund.

As we enter this next phase of debating and advancing the best solutions for restoring businesses affected by COVID-19, insurance professionals should be mindful as to how these issues will be debated in the court of public opinion. We insurance insiders need to be careful not to get too wonky with the insurance terminology and clauses.

We know the intricacies of coverage for BI claims requiring suspension of the insured’s operations and the suspension must be caused by direct physical loss or damage to property. That a virus is an excluded cause of loss from the standard ISO form. While factual and important information to share, we have to be mindful of how we express the technical intricacies of common insurance policy terms like exclusions, direct physical loss, period of restoration, civil authority, ISO and the litany of insurance acronyms.

People are hurting and we must be empathetic to their situation. We cannot compromise the responsibility we have as risk advisors and must protect our own agency from a potential E&O claim but we should be sure that our factual answers are given with empathy, shared togetherness and enthusiastic advocacy for a comprehensive federal solution from the federal government.

Overly technical insurance jargon in public forums will come off as cold and disingenuous. Technical insurance arguments are best suited for court proceedings and legal documents arguing the details of the insurance contract. Much of this debate is going to take place in forums where the average reader is not a CIC, CPCU, CRM or anyone with any unique insurance knowledge.

Thus, as we enter this challenging next phase of reopening our economy and putting businesses on the path to recovery, we are trying to emphasize four points in each conversation with the public on this issue –

  1. Show empathy. Acknowledge we are all hurting and in this together. We are proactively advocating for solutions to restore business owners for loss of business income.
  2. Viruses do not cause physical damage and are generally excluded from BI coverage.
  3. We need to enact the COVID-19 Recovery Fund in Congress to provide a comprehensive federal solution to restore businesses. We expect legislation to be introduced in the coming days.
  4. Government can order us to stay home and close businesses, but it cannot stop natural disasters, the increase in house fires and cyberattacks we are experiencing. Insurance must remain strong to ensure it can protect against the inevitable claims it was underwritten for. Bankrupting the industry to retroactively pay for BI claims is not a sound solution to economic recovery.

This is a stressful time for everyone, please show empathy to all during this difficult time. Let us know if we can be a resource as this issue continues to develop. Send me a note at or call me at 614-552-3056 if you have thoughts on this or other topics related to COVID-19. Be well.

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