Trio of Decisions Illustrate the Complexity of COVID-19 Related Business Interruption Claims

Claims for business interruption coverage flowing from the COVID-19 pandemic generally fall into three categories: (1) the insured alleges business losses that flow solely from government orders, and does not claim that the virus was present or suspected of being present on the insured premises, (2) the insured claims that the virus may have been present on the premises, and (3) the policy contains a “Virus or Bacteria” exclusion – which arguably renders any distinction between (1) and (2) moot.

Although insurers have won several dozen dispositive motions on these issues nationally, a handful of decisions have found that coverage is possible – particularly those falling in the second category – and Michigan’s appellate courts have not yet had an opportunity to consider these issues.

However, most of the non-binding Michigan decisions favor insurers. This includes three trial court decisions issued last week, which granted insurers’ dispositive motions.

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