But as fear and the reality of losing income mounts from shutdowns and recommendations for social-distancing continues, business owners with interruption clauses in their commercial property insurance policies want to know if a virus can cause physical damage.

Businesses are filing lawsuits against insurance companies

Although a virus would not normally be seen as having the ability to cause physical property damage, COVID-19 may compromise the premises to create a dangerous risk, such as contaminated surfaces or the overall air quality. That’s the argument attorneys for a New Orleans’ restaurant are presenting in a civil district court in what was believed to be the first U.S. business to file suit against an insurance company to cover losses due to a government-ordered coronavirus closure. Other cases are now following suit around the country under the same theory to challenge the exclusions and allow coverage under these policies, as the virus is now having such a devastating effect on business.

More lawsuits are likely to follow around the country and the debate over business interruption coverage is not likely to be quelled anytime soon. Meanwhile, legislators in at least four states are considering enacting laws that would allow retroactive changes to insurance policies that would require insurers to make payouts for business interruptions resulting from coronavirus. The constitutionality of these measures has yet to be tested by the courts.