Companies across the country are facing bad faith Insurance practices related to the coronavirus pandemic. A large hotel operator has sued its insurer for bad faith insurance practices after the insurer refused to cover losses they had sustained due to the coronavirus pandemic. The hotel operator has accused the insurance company of breaching its contract with them. The insurance company refuses to pay out a claim under the policy’s $300-million “all-risk” insurance policy.
Are Coronavirus-Related Losses “Direct Physical Losses”?
The hotel operator alleges that losses caused by the coronavirus pandemic constitute a “direct physical loss.” They contend that the coronavirus pandemic can spread through the air and surfaces in their hotels, making their hotels unfit, unsafe, and uninhabitable for customers. The company also contends that government shutdown orders have restricted their clientele and that employee infections have had a devastating effect on their hotels. As with many other Industries, their hotel businesses have not returned to pre-coronavirus levels, despite governments easing their restrictions.
The hotel chain argues that their insurance company has violated local deceptive practice laws by denying their claim in bad faith. According to the hotel company, the insurance company breached an implied duty of good faith and fair dealing. Specifically, they contend that the insurance company failed to conduct a thorough and fair investigation before denying its compensation claim.
On the contrary, the insurance company has requested that the court dismiss their lawsuit. They contend that the insurance policy only requires them to pay for damage caused by a “covered cause of loss.” According to the insurance company, the financial losses associated with a virus or other disease-causing or illness-causing substance are listed explicitly in excluded causes. The insurance company contends the coronavirus pandemic does not cover the type of damage or loss that would trigger their policy coverage.
Companies Around the Country are Filing Bad Faith Insurance Lawsuits
Hundreds of businesses have been denied insurance coverage after seeking compensation for financial losses due to the coronavirus pandemic. These business owners have sued the owners of their insurance policies for bad faith practices. In the lawsuit mentioned above, the business owners noted that there had been over 20 different court rulings around the country that lean in their favor. In these court rulings, judges have concluded that the government closures and business disruption caused by the pandemic do constitute a direct physical loss that insurance companies should cover.
In many cases, courts side with the insurance company. These courts rule that coronavirus business interruption claims should fail because the business owners cannot prove that they have suffered direct physical loss or damage to their insured property. Unless they can show the coronavirus itself causes a direct physical loss to property, they are not entitled to compensation through their policy.
Bringing a Bad Faith Insurance Claim Against Your Insurance Provider
Suppose you are one of the thousands of business owners in Alabama who have been negatively affected by the coronavirus. In that case, you may be wondering whether you can obtain compensation through your commercial insurance policy. Perhaps you have already submitted a claim with your commercial insurance provider, and they denied the claim once or multiple times. You may be entitled to compensation through a bad face insurance lawsuit.
When insurance companies avoid paying out compensation through legitimate commercial claims, they are acting in bad faith. Businesses should assume that their insurance companies will act in good faith should an accident occur and pay the business the money they owe according to the contract. When insurance companies use bad faith tactics to deny a legitimate insurance claim or refuse to pay the claim’s full amount, business owners can bring a lawsuit to collect damages. Bad faith insurance practices include the following:
- Deceptive practices such as misleading policyholders are confusing them about their policy
- Failure to undergo a complete and thorough investigation before denying an insurance claim
- Unreasonable delays or procrastination
- Refusing to provide the policyholder with the fair market value of a claim
- Placing arbitrary demands on the business owner regarding proof of loss
- Deliberately misinterpreting the language of the insurance policy or records
- Using abusive tactics, harassment, or threatening litigation
Contact an Alabama Bad Faith Insurance Lawyer Today
If you are a business owner who has been financially devastated by the coronavirus pandemic, our law firm can help. We will review your situation and help you determine whether you have a valid bad faith insurance claim. Our legal team will hold your insurance company accountable and help you obtain the compensation you deserve. Contact us today to schedule your initial consultation.