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Steven Corhern Spoke to the Birmingham Business Journal about Business Interruption Insurance Claims Amidst COVID-19

Balch & Bingham's Steven Corhern, partner and member of the firm's Insurance Coverage Practice, recently spoke with the Birmingham Business Journal about pandemic-related business interruption insurance claims. 

These claims arise from businesses closing due COVID-19 or social distancing requirements.

According to the article, published on July 23, 2021, companies began filing claims as early as mid-March last year with a total of 1,952 cases – 11 in Alabama – filed to date. While many businesses may have expected their insurers to cover their substantial lost revenue, insurance carriers have denied almost all claims related COVID-19.

In an interview, Steven explained that arguments for COVID-19 coverage are very difficult because under existing case law, virus contamination is usually not enough to find “direct physical loss,” which is usually required to trigger insurance coverage. 

“A few cases, including several here in Birmingham, have alleged that government orders requiring businesses to close are enough to trigger coverage,” Steven said. “As far as I am aware, no Alabama court has accepted this argument. Even if a court did accept this argument, there are other exclusions that would arguably bar coverage.”

Steven noted that some policies do have special endorsements that cover virus-related losses, but that coverage is often limited to around $25,000. Many litigators expected a flood of business-interruption insurance litigation  but that has not materialized. “Far fewer lawsuits were filed than I initially expected,” Steven said. He believe this may be due to PPP loans and other mitigation efforts, like restaurants offering curbside pick-up. This mitigation helped businesses decrease their losses and likely made the pursuit of a business interruption claim, which involves substantial costs, less worthwhile. Steven also mentioned that he does not expect significant increase in COVID-19 related litigation in the future. 

A partner in Balch's Birmingham office, Steven focuses on insurance coverage, mass torts, and class actions. He regularly advises business on insurance and indemnity issues and has defended businesses in state and federal courts across the United States.