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Will My Company’s “Business Interruption” Policy Cover Losses Related To COVID-19 Restrictions?


The COVID-19 pandemic has forced the temporary or permanent closure of many Florida businesses. Indeed, even the best-managed company has faced unprecedented challenges over the past two years. And many firms have looked to their own insurance policies–specifically those protecting against loss of income or “business interruption”–to try and make ends meet.

Unfortunately, such claims typically lead to litigation–and the outcome often does not favor the business owner. Insurance policies are carefully drafted by the carriers to minimize their potential exposure to public health emergencies like COVID-19. This can make it difficult, if not impossible, for the policyholder to prevail on a breach of contract claim.

Take this decision from a federal judge in Miami, Digital Age Marketing Group, Inc. v. Sentinel Insurance Company Limited. The plaintiff in this case is a Broward County business that sought coverage under its business interruption policy for losses sustained due to the government’s prior stay-at-home and shelter-in-place orders imposed earlier in the COVID-19 pandemic. The specific policy in question covered “direct physical loss or physical damage” to the plaintiff’s business property.

When the defendant insurance company denied coverage, the plaintiff sued. The case was initially filed in Florida state court but later transferred to federal court at the defendant’s request. Before the federal court, the defendant argued that the plaintiff’s business interruption policy contained a specific “virus exclusion provision” that barred any recovery. However, the plaintiff pointed out the policy also contained a “virus endorsement” that provided coverage in certain cases.

Although these two provisions might seem to be in conflict with one another, the judge explained it actually worked out in favor of the insurance company. Basically, the two provisions read together excluded coverage for any virus-related business losses unless the virus was the result of a “specified cause of loss.” The policy listed a number of these specified causes, such as fire, rioting, or sinkhole collapse. But none of these causes covered COVID-19. As such, the virus endorsement did not apply but the virus exclusion did.

Additionally, the judge noted the policy only covered businesses losses related to “physical loss or damage.” Economic losses due to the virus, and the accompanying government-mandated restrictions on businesses, did not actually physically damage the plaintiff’s business or property. So even if the virus exclusion did not bar coverage, the plain language of the policy would still entitle the plaintiff to nothing.

Contact a Sarasota Business Litigation Attorney Today

There have been a number of cases filed in Florida courts in the past year, and the general consensus seems to follow the reasoning of the Digital Agedecision. In simple terms, you cannot count on your business interruption insurance to protect you for purely economic losses sustained due to COVID-19. At the same time, every insurance policy is different, and the facts of a specific case can lead to a different outcome than the one described above.

That is why it is important to consult with an experienced Bradenton business lawyer before pursuing an insurance claim or breach of contract lawsuit over a policy. Contact Suncoast Civil Law today to schedule a consultation with a member of our business litigation team.