Sommers Schwartz attorneys Andrew Kochanowski, Jason Thompson, and Robert Sickels filed a class action on behalf of Michigan businesses forced to shut down during the coronavirus emergency, but whose business interruption coverage claims were denied by Hanover Insurance Group and Citizens Insurance.

As we described in a previous blog post, insurance companies look to reject policyholders’ claims whenever possible, and try to shield themselves with any condition or limitation that saves them from having to pay benefits – pandemic or no pandemic.

Following the “Stay Home, Stay Safe” Order

The plaintiffs each purchased a standard-form all-risk “Businessowners Coverage Form” property and casualty insurance policy from the defendant insurance companies. The policy promised to cover direct physical property loss or damage, and that under a “Civil Authority” provision, the defendants were to pay lost net income, payroll costs, and other business expenses if the plaintiffs’ businesses were “suspended” for any non-excluded reason.

On March 24, 2020, Michigan Governor Gretchen Whitmer issued Executive Order No. 2020-21, which required non-essential workers to stay at home and businesses not involved with maintaining critical infrastructure to close their operations. The plaintiffs in the class action were subject to, and not excepted from, the emergency order.

Insurers Wrongfully Deny Business Insurance Coverage

When the plaintiffs filed claims for insurance benefits after the statewide shutdown order forced them to suspend their operations, the defendants invoked a so-called “virus exclusion” to systematically deny all business interruption coverage claims associated with the pandemic.

The plaintiffs argued that the defendants’ interpretation of the virus exclusion was wrong: COVID-19 was not the direct cause of their property damage, nor were the plaintiffs’ businesses suspended because their premises needed to be decontaminated from the coronavirus. Instead, Governor Whitmer issued the Executive Order to ensure COVID-19 did not contaminate their premises or infect their personnel.

The lawsuit alleged that the defendants breached their insurance policy contracts by refusing the plaintiffs’ property loss and business interruption coverage claims. The plaintiffs sought damages from the breach and a declaratory judgment that the policies provided coverage for loss of business income and expenses precipitated by the March 24, 2020, Executive Order.

Speak With an Experienced Business Insurance Coverage Attorney

Businesses of all sizes throughout Michigan have been affected by the economic impact of the COVID-19 coronavirus. If your business suffered property damage or income losses from complying with the Governor Whitmer’s executive order, but your insurance company won’t honor its policy and pay you the benefits to which you’re entitled, please contact Sommers Schwartz today.

We continue to add new clients to the class of plaintiffs in this case, and would be happy to discuss your situation and your right to compensation.