Recovering from the economic collapse caused by the coronavirus, many U. S. corporations say insurers mistakenly refuse to respect policies that would help them succeed over unforeseen events, adding the pandemic.
About 1,100 lawsuits have been filed against insurers since the public fitness crisis, basically due to litigation related to so-called business continuity insurance or “disruption,” said Robert Hartwig, a professor at the Darla Moore School of Business at the University of South Carolina. These policies are designed to cover losses when a company has to temporarily close some or all of its operations, as companies were forced to do en masse before this year.
Retailer Century 21, for example, blamed its insurer for pronouncing last month that the 60-year-old company would permanently close. Century 21 owner said it has probably stayed open, and in all likelihood stored thousands of jobs, if its insurers had paid for the retailer’s business disruption policy. Century 21 insurers declined to comment on the retailer’s claims.
“This is a cynical attempt to stay in cash and not pay policyholders who have been paying premiums for years,” said Hunton attorney Walter Andrews Andrews Kurth, who represents several advertising clients claiming to be cared for through their insurers. that if they pay what they owe, they will suffer financially. Instead, the corporations they were meant to help are in arrears. “
To date, judges across the country have sided with insurance companies and ignored many of COVID-19’s early claims. However, in recent weeks, two judges, one in Missouri and one in New Jersey, recently rejected insurance companies. dismissal motions presented through a beauty salon and an organization of optometry signatures, respectively. It is given to the insured, and the lawyers would constitute them, a small hope.
Legal experts say maximum instances revolve around how courts interpret the term “physical loss or damage. “Sherilyn Pastor, wife of the law firm McCarter
“The damage will have to mean anything other than loss, or why would the two words be there?” He said. “There is an intelligent legal precedent that the loss of use of your assets is covered by those policies. “
But Hartwig, a business professor and continuity insurance expert, said corporations were facing a difficult rise to convince the courts to demand payment for insurance. “Whenever there’s an herbal disaster, enterprising litigants invent a blanket where none are any and never planned,” Hartwig said. “It’s not another one this time. “
Hartwig claimed that the term “loss” in the insurance box has long been interpreted as a robbery and not in a store, workplace or other place. In addition, 80% of insurance policies in particular exclude viruses. Most other policies do not deal with such incidents, he said.
Another case considers clothing company Ralph Lauren. The store sued its insurance company, Factory Mutual, in August, alleging that it had been defrauded by up to $700 million and calling the insurer’s habit “unacceptable” and “misleading. “Factory Mutual one of the few offer policies that explicitly provide some policy for pandemic losses.
According to Ralph Lauren’s demand, the clothing company purchased a one-year policy from Factory Mutual in May 2019 and renewed it by 2020 Ralph Lauren claims that the policy covers all risks, “loss or physical damage” and, more specifically, “transmissible reaction”. to the disease. “
The policy, revised through CBS MoneyWatch, specifies that Factory Mutual will cover disease cleanup and downtime caused by the presence of communicable diseases on a corporate site. The cleaning canopy, however, has a limit of $1 million.
Ralph Lauren stated in his complaint that the cleaning fee does not save him from claiming an interruption and other losses resulting from the pandemic under other parts of his policy, which has an overall limit of $700 million.
Ralph Lauren opened late retail stores in mid-March as the coronavirus spread, and kept most of them closed for at least a month. The company said it contacted Factory Mutual on March 30 to make a claim. responded last April that he would pay the cleaning prices of canopies at retail outlets, such as cleaning surfaces, but nothing else.
According to Ralph Lauren, Factory Mutual told the corporation that under his policy he will have to suffer certain types of physical harm and that COVID-19 does not cause “physical damage of the insured type”. The insurer also indicated that advertising losses incurred through the closure of the store due to a government-ordered closure were not covered, according to demand from the clothing company.
In early August, Ralph Lauren filed a lawsuit. ” The controversy between Ralph Lauren Corp. and FMIC is ready for judicial review,” Ralph Lauren said in the complaint. “As a result of FMIC’s unwarranted refusal and fraudulent conduct, Ralph Lauren Corp. has suffered and continues to suffer extensive damage. “
Ralph Lauren declined to comment on the story. A spokesman for Factory Mutual declined to comment on the main points of the case.
“FM Global appreciates our long-term relationships with our policyholders and we are proud to lead the claims facility industry,” the spokesman told CBS MoneyWatch. “It is bad luck that legal disorders arise, as we firmly believe that our insurance policies are transparent about the policy provided. “
At least 3 other companies, in addition to Treasure Island Casino in Las Vegas, New York real estate company Thor Equities and barcode specialist Zebra Technologies, are also suing Factory Mutual for allegedly not meeting its continuity coverage. on behalf of the universities and schools that bought the company’s continuity policies but were denied claims.
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Market knowledge through ICE Data Services. LIMITATIONs of ICE. Developed and implemented through FactSet. News through The Associated Press.