A development in the case law might lead to an opening for business interruption coverage for COVID-related loss for Louisiana properties. A Connecticut case (interpreting a nationwide policy with several state endorsements) flagged the issue that Louisiana policy endorsements sometimes carve out the virus exclusion that otherwise exists in business interruption policies. See New Castles Hotel, LLC v. Zurich Am. Ins. Co., No. X07-HHD-CV-21-6142969-S, Superior Court, Complex Litigation Docket (Conn. Sept. 7, 2021). The carve-out exists across different carriers’ policies, so it is potentially fairly common.
The virus exclusion for business interruption policies has been the biggest hurdle to coverage for policyholders. If a policy bars coverage based on the presence of a virus, there is little argument that coverage could apply to COVID-related business income loss. But, if a policy does not have the virus exclusion, the question of coverage has been a closer call.
Without the virus exclusion, whether coverage is available turns in large part on whether the presence of the virus that causes COVID-19 is deemed “physical loss or damage.” Courts have had mixed answers to this question, resulting in case-by-case variations and fact-specific inquiries. Any businesses with significant business income loss for Louisiana properties could find it worthwhile to revisit their business interruption policies. For further discussion on the potentially available coverage and how to preserve that coverage, please reference our earlier article – Don’t Miss Out on Potential Insurance Coverage for Business Loss from COVID-19.