Articles & Alerts

Update on COVID-19 Business Interruption Insurance Claims

By April of 2020, businesses across the country were impacted by the COVID-19 pandemic, and in many instances, were economically impacted by stay-at-home orders issued by various government agencies in the interest of protecting the public from the COVID-19 virus. Many businesses had obtained commercial property insurance that included business interruption (“BI”) insurance coverage, a type of coverage that helps protect businesses against monetary losses during periods of suspended operations when a covered event, such as a fire or the negligence of a third party, occurs. However, most BI policies require that a covered event must cause direct physical loss or damage to the insured’s property for BI coverage to apply.

In the aftermath of the pandemic’s peak, thousands of businesses have filed claims with their insurance carriers to recoup income that they lost as a result of COVID-19, stay-at-home orders and other public health-related orders and regulations. However, the majority of the state and federal courts have denied these claims and, as a result, these businesses have not been able to recover damages from their BI insurance policies. The decisions made in federal, and most state courts, have been fairly similar across cases: that losses suffered as a result of the COVID shutdowns do not constitute direct physical loss or damage to property.

Federal district courts across the country have permanently tossed about 51% of the 1,435 suits from policyholders seeking BI coverage for these COVID-19 related losses, and another 20% of the suits have been voluntarily dismissed. Approximately 25% of these claims have yet to be fully decided. [1]

While the federal courts have mostly found in favor of the insurer, some state courts have been or still might be, favorable to some policyholders. The following is a discussion of selected matters and their status.

First Case in the U.S.: Cajun Conti LLC (dba Oceana Grill) v. Lloyd’s London – Current decision on appeal

In March 2020, Cajun Conti dba Oceana Grill, a New Orleans-based restaurant, became the first U.S. business to file a lawsuit for a COVID-19 BI claim. This case went to bench trial in December of 2020. In February of 2021, the court ruled against the restaurant. Cajun Conti subsequently filed an appeal arguing that “the presence of Covid-19 on Oceana’s premises rendered anywhere from 50 to 100% of it unusable, constituting direct physical damage to the property.” [2] In November 2022, “the Louisiana Supreme Court agreed to consider whether [Cajun Conti] is entitled to coverage for its pandemic losses.” [3]

First Case in NY: Soundview Cinemas Inc. v. Great American Ins. Group

During 2020, Soundview Cinemas, Inc., a movie theater in Port Washington, New York, filed a claim against Great American Insurance Co. of New York for business interruption losses resulting from COVID-19, as well as claims against the insurer’s wholesale insurance broker and the theater’s own insurance brokers for allegedly negligently purchasing policies with insufficient coverage. In February 2021, the court concluded that the “loss of the use of the premises due to COVID-19 related government orders does not constitute ‘direct physical loss of or damage to the property’ that would trigger business income coverage under the policy” and dismissed this and all other claims. [4]

Baylor College of Medicine (BCM) v. XL Insurance America Inc. (XL) et al.

In August 2022, “a Texas jury reached a $48 million verdict in favor of BCM in its COVID-19 coverage suit against several Lloyd’s of London syndicates, becoming the first jury to side with a policyholder in a pandemic-era business interruption suit.” [5] “The jury found that BCM suffered about $42.8 million in lost profits, about $3.3 million in extra expenses …, and about $2.3 million in damage to Baylor’s research projects.” [6] Ultimately, BCM was awarded 25% ($12 million) of the total damages representing The Lloyd’s syndicates’ share of BCM’s property coverage. It is our understanding that Lloyd’s has appealed the verdict. [7] The remaining 75% of BCM’s coverage is from XL and ACE American Insurance Co, whose coverage was excluded because their policies mentioned “virus” in their pollution and contamination exclusion. BCM has appealed this exclusion. [8]

As noted on the Insurance Business America website, “In previous COVID-19-related BI insurance cases, an overwhelming majority of federal and state courts sided with insurers, ruling that the virus does not cause any ‘direct physical loss or damage to property’, according to the University of Pennsylvania’s COVID Coverage Litigation Tracker.” [9] However, in BCM’s case, a state court judge decided the question of whether the virus causes direct physical loss or damage to property is a fact issue for the jury.” In this matter, the jury decided in favor of the medical school.

Anchin’s Litigation, Forensic and Valuation Services (LFVS) group is trained in expert witness testimony and calculations of economic damages. For more information, please contact Anthony Bracco, Partner and Leader of the LFVS group, David Beckman, Partner of the LFVS group, or your Anchin Relationship Partner.

Robert Morgan, Supervisor on the LFVS team, assisted in the preparation of this article.

[1] 9th Circ. Asks Calif. Justices To Weigh in on 2nd Virus Case, Riley Murdock,, 2/26/2023

[2] La. Panel to Hear Appeal From 1st COVID -19 Coverage Trial, Ben Zigterman,, 4/7/2022

[3] La. High Court to Test Major Policyholder Virus Coverage Win, Eli Flesch, Law, 11/23/2022

[4] Insurer, Brokers Prevail in Cinema’s COVID-19 Coverage Suit, Jeff Sistrunk, 2/11/2021

[5] Texas Jury Awards Baylor Med School $48M In  A COVID First, Ben Zigterman, 9/2/2022

[6] Id.


[8] Texas Jury Awards Baylor Med School $48M In A COVID First, Ben Zigterman, 9/2/2022