Skip to content


Glad you came to CAConnect!

Mar 26, 2020

Welcome to CAConnect! Our goal is to provide periodic updates on the impact COVID-19 is having on the insurance marketplace as a whole, and more specifically on the management and professional liability space. Where appropriate, we will do our best to add some levity as well. We appreciate you visiting, and we hope you continue to check back in with us. We are all in this together!

The Market:

The weekly unemployment numbers were released this morning, and they are rough. 3.28 million people filed for unemployment last week. The number is unprecedented, but not unexpected as the US economy has basically ground to a halt. Relief appears to be on the way from the federal government as the massive $2.2 trillion stimulus package, which includes expanded unemployment assistance, has passed the senate and has now gone back to congress for approval. The DJIA opened at 21,468.

Can state legislatures override existing insurance contract wording to assist small businesses in this crisis?

Following New Jersey’s lead, legislators in Massachusetts and Ohio introduced bills that would force insurers to provide business interruption coverage to small businesses (in Mass, businesses with 150 employees or less, and in Ohio, businesses with 100 people or less). Although the bills differ in scope (Massachusetts going as far as “…stating that insurers cannot deny business interruption claims based on ‘COVID-19 being a virus, even if the relevant insurance policy excludes losses resulting from viruses’ or ‘there being no physical damage to the property of the insured or to any other relevant property’”), both are designed to require insurers to pay out regardless of contract wording. Insurers would in turn be able to seek reimbursements from the state insurance regulators. The bills call for such reimbursements to be funded by “…special assessments imposed on insurers that sell business interruption coverage.” We expect that the Massachusetts and Ohio bills will quickly draw criticism from the insurance industry. After the New Jersey legislation was introduced, a letter sounding the alarm was circulated by the National Association of Mutual Insurance Cos. “…calling the proposal ‘potentially disastrous’ and expressing concern that (the bill) constitutes an ‘inappropriate intrusion into contract law.” The New Jersey bill was put on ice on March 16th.

Searching for certainty as to how to recoup COVID-19 related business losses, more and more Insureds are turning to the courts.

Two virtually identical complaints were filed on March 24th by the Chickasaw and Choctaw Nations against their respective property insurers. The Tribes are seeking declarations from the courts that their insurers are on the hook for COVID-19 related losses. Both Tribes allege that as a result of the pandemic, the Nations’ property “…sustained direct physical loss or damage and will continue to sustain direct physical loss or damage covered by the (property) policies, including but not limited to business interruption, extra expense, interruption by civil authority, limitations on ingress and egress, and expenses to reduce loss.” The first declaratory action by a COVID-19 impacted business against its property insurers, Cajun Conti LLC et al. (Oceana Grill) v. Certain Underwriters at Lloyd’s London et al., was filed in Louisiana on March 16. We expect to see many more of these cases.


  • Jeff Sistrunk, Ohio, Mass. Bills Aim to Expand Companies’ Virus Coverage, Law360, March 25, 2020
  • Chickasaw Nation Department of Commerce v. Lexington Insurance Co., et al.
  • Choctaw Nation of Oklahoma v. Lexington Insurance Co. et a.
  • Lauren Berg, Okla. Tribes Want Lloyd’s, AIG to Cover Covid-19 Biz Losses, Law360, March 24, 2020
  • Jeff Sistrunk, New Orleans Restaurant Seeks Coronavirus Closure Coverage, Law 360, March 17, 2020
Posted in