COVID-19: Coverage Litigation Update

While the coronavirus pandemic continues to significantly impact people and businesses throughout the United States and the world, challenges by policyholders, scrutiny from courts, and reexamination by state and federal legislatures are testing all types of insurance products. Most of the pending coverage litigation addresses commercial first-party/business interruption coverage, with policyholders claiming that government-mandated closures constitute direct physical loss or damage to their property, or implicate civil authority provisions. Most—but not all—courts have concluded that these claims fall outside the coverage offered by standard policies. Other pending litigation addresses coverage for coronavirus-related losses under premises pollution liability and other policies. Meanwhile, legislation aimed at facilitating recovery under business interruption policies is pending in the U.S. Congress and several state legislatures. Here, we discuss the early developments in this dynamic new arena of coverage litigation.