Hunton Insurance Recovery Blog

As reported in a recent Hunton Andrews Kurth client alert, Mitigating FCRA Risks in the COVID-19 World (Oct. 23, 2020), consumer litigation claims related to the Fair Credit Reporting Act (FCRA) doubled in the years leading up to the COVID-19 pandemic. After a slight decrease in FCRA filings due to court closures and other COVID-19 restrictions, claims will likely resume their previous upward trajectory. In fact, the Consumer Financial Protection Bureau (CFPB) has already seen an uptick in consumer complaints, many of which mention COVID-19 specific keywords.

In another victory for policyholders, a Pennsylvania judge denied an insurer’s early attempt to avoid coverage for losses arising from the COVID-19 pandemic. Although the judge did not explain his reasoning, the denial is positive news for policyholders who are litigating whether COVID-19 causes “physical damage or loss” and whether so-called “virus” exclusions limit or bar coverage for pandemic-related losses.

In a resounding victory for policyholders, a North Carolina court ruled that “all-risk” property insurance policies cover the business-interruption losses suffered by 16 restaurants during the COVID-19 pandemic.  North State Deli, LLC v. Cincinnati Ins. Co., No. 20-CVS-02569 (N.C. Sup. Ct., Cty. of Durham, Oct. 7, 2020).  This is the first judgment in the country to find that policyholders are, in fact, entitled to coverage for losses of business income resulting from the COVID-19 pandemic.  Equally important, the decision illustrates that a proper analysis of the operative policy provisions requires this result.

As we explained in our earlier post, in a decision that could influence how policyholders and insurers around the world address business-interruption coverage for COVID-19 losses, the London High Court recently handed down its much-anticipated judgment in the Financial Conduct Authority’s “Test Case,” The Financial Conduct Authority (FCA) v. Arch et al.  Because the judgment provided that coverage was available for COVID-19 business-interruption losses under most of the policy wordings at issue, it was highly anticipated that the insurance companies at issue would challenge the judgment in a fast-tracked “leapfrog” appeal to the Supreme Court of the U.K., expected to be heard by the end of the year.  Yesterday, however, six of the insurance companies subject to the judgment decided not to pursue an appeal in connection with some of the policies, and one of the insurers stated that it would instead begin to make payments where appropriate.

On October 6, 2020, U.S. District Judge Thomas Thrash Jr. issued Georgia’s first COVID-19 business interruption insurance decision, finding Governor Brian Kemp’s State of Emergency Executive Order did not cause “physical loss of” the policyholders’ closed dining rooms. Henry’s Louisiana Grill, Inc. et al. v. Allied Ins. Co. of Am., No. 1:20-cv-2939-TWT (N.D. Ga. Oct. 6, 2020). The decision takes an unusually narrow view of the phrase “loss of,” as it is used in the policy and, consequently, reaches a conclusion that is inconsistent with how other courts have analyzed the phrase.

In another win for policyholders, the United States District Court for the Middle District of Florida on September 24, 2020 denied Sentinel Insurance Company’s motion to dismiss the policyholder doctor office’s claim for COVID-19 related business interruption coverage.  Urogynecology Specialist of Florida LLC v. Sentinel  Insurance Company Ltd., Case No.: 6:20-cv-1174-Orl-22EJK (M.D. Fla. Sept. 25, 2020). The court engaged in a true analysis of the policy’s virus exclusion language, finding that the insurer had not met its burden of showing that its proposed reading of the exclusionary language is the only reasonable interpretation.

As we reported in a prior blog, on August 14, the Judicial Panel on Multidistrict Litigation rejected plaintiffs’ request for a consolidation of all COVID-19 insurance coverage federal litigation, agreeing to consider mini-MDLs as respects five specific insurers, which accounted for roughly one-third of the federal cases. On October 2, the Panel rejected the concept of mini-MDLs as respects four of these five insurers and accepted an MDL for the fifth insurer.

At the outset, the Panel agreed with plaintiffs that each of the proposed mini-MDLs presented common legal and factual ...

A Pennsylvania trial court denied an insurer’s early attempt to lunge out of coverage for COVID-19 business interruption losses suffered by a fitness center, stating it would be premature for the court to resolve factual determinations the insurer raised in its demurrer. Ridley Park Fitness, LLC v. Philadelphia Indemnity Insurance Co., No. 200501093 (Pa. Ct. Com. Pl. Aug. 13, 2020).

In a decision that will influence how policyholders and insurers around the world address business-interruption coverage for COVID-19 losses, the English High Court recently handed down its much-anticipated judgment in the “Test Case,” The Financial Conduct Authority (FCA) v. Arch et al. The High Court’s comprehensive analysis will likely serve as an additional tool in policyholders’ arsenal in the ongoing battles over COVID-19 coverage.

On September 29, 2020, The National Law Review published an article by Scott DeVries, Lorie Masters, and Michael Huggins concerning setting the correct prism for construing policy language, which can be outcome-determinative in COVID-19 business interruption cases.  A key takeaway from the article is that a court’s adherence to traditional principles of insurance policy interpretation may result in more cases finding in favor of business interruption coverage for COVID-19 related claims.  For example, relevant principles of interpretation include, among others, that ...