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On April 14th, the Eighth Circuit became the first appellate court to hear a business interruption and COVID-19 insurance coverage caseAs one of more than 1,600 COVID-19 business interruption lawsuits nationwide, this case could set the precedent for ongoing business interruption litigation, forthcoming appeals and subsequent rulings on this issue. The editors here at the Insurance Coverage Law Center have capitalized on our relationship with some insurance industry thought leaders, and posed some questions to them regarding the appeal. Below are some of their answers.

M.C. Sungaila, leader of Buchalter’s Appellate Law Practice Group, noted that so far, insurers seem to be prevailing more than insureds in the trial courts on business interruption claims because of the “direct physical loss” requirement. For example, Massachusetts right now has a 5-0 record for insurers. Sungaila does anticipate appeals in many of these business interruption cases, particularly in hard-hit industries like the restaurant sector.

ICLC: What are your predictions on the outcome of the appeal? What impact could this outcome potentially have on business interruption litigation going forward?

Leslie Thorne, a New York-based partner in Haynes and Boone’s Insurance Recovery Practice Group and co-chair of their Litigation Practice Group said that she was hopeful that the Eighth Circuit—like other courts—will acknowledge that structural change to the insured’s property is not required for there to be a “physical loss.”  A win for policyholders would certainly be helpful from a persuasive standpoint, but it’s also important to remember that the Court is deciding an issue of Iowa state law.  Courts across the country will have the opportunity to consider these issues under different state laws and we may very well see them reach different conclusions based on the facts, pleadings, and policy language before them.

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Hannah Smith JD


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