As the Fifth Circuit reminded us in a December 21 decision, primary insurers can find themselves in excess insurers’ shoes if they reject settlement demands within their policy limits. In American Guaranty & Liability Insurance Co. v. ACE American Insurance Co., the Fifth Circuit upheld a lower court ruling requiring a primary insurer that rejected a $2 million policy-limits demand to pay the entire judgment because “a prudent insurer would have accepted” the settlement…

Notwithstanding insurers’ transparent attempts to convince you otherwise, policyholders may very well have coverage for business interruption losses from COVID-19 under their property policies. Since the start of the pandemic, insurers have tried to weave a narrative that policyholders cannot win coverage suits for business-interruption losses resulting from the pandemic. The opinions to date tell a much different story. While some courts have rejected COVID-19 coverage claims, numerous courts have ruled in favor of policyholders…

Confirming the growing split of decisions among federal courts addressing COVID-19 insurance issues, two district courts in the Fifth Circuit differed in their interpretation of virus exclusions, with one denying coverage and the other permitting the policyholder’s claim to proceed. On November 4, a Mississippi federal district court dismissed a restaurant’s complaint for business interruption losses from COVID-19 shutdown orders because the plaintiff did not allege tangible damage or “permanent dispossession” of use of the…

A North Carolina court has required Cincinnati Insurance Company to provide business interruption and extra expense coverage to 16 North Carolina restaurants that lost the use of and access to their properties due to COVID-19 civil authority orders (see North State Deli, LLC, et al. v. Cincinnati Insurance Co. et al.). The court agreed with the restaurants that governmental orders mandating suspension of operations, imposing stay-at-home requirements, and restricting travel caused them a covered physical…

The Panel on Multidistrict Litigation has rejected efforts to centralize pretrial proceedings in actions in Pennsylvania and Illinois seeking insurance coverage for business interruption losses resulting from COVID-19. The request for MDL-status was hotly contested, with insureds in more than 175 coverage actions responding to the centralization motions. Some insureds supported centralization in either Pennsylvania or Illinois, while others sought centralization elsewhere – including in California, Florida, Missouri, New Jersey, and Washington. Other insureds opposed…

Judge Stephen Bough and the federal court in the Western District of Missouri entered an important order yesterday in a case brought by Studio 417, a hair salon, and several restaurants against Cincinnati Insurance Company. The order denied the insurer’s motion to dismiss, finding the plaintiffs’ COVID-19 coverage allegations were sufficient to move forward. This is an early ruling in the case and subject to change after discovery, but this is a significant step for policyholders pursuing…

June 1 marked the start of hurricane season, and according to the National Oceanic and Atmospheric Administration (NOAA), the Atlantic hurricane season will be a busy one. NOAA predicts a 60% chance of an above-normal season, a 30% chance of a near-normal season and only a 10% chance of a below-normal season. Since June 1, there have already been five named storms in the Atlantic; Cristobal was the earliest “C” storm on record and its…