Are insurers prepared for the COVID-19-related litigation avalanche?

Many businesses closed due to government orders related to the coronavirus. Featured here is Ziggy’s Burgers on Drumm Street in San Francisco. (Photo: Jason Doiy/ALM)

It’s fair to say that the long-anticipated wave of COVID-19-related litigation against insurers is beginning to break. In the U.S. alone, there are currently 1,295 such cases making their way through the courts. To put it another way, the number of litigation cases against insurers for COVID-19 has been higher than after total natural disasters between 2009 and 2020.

These cases primarily revolve around business interruption (BI) claims, with some notable exceptions stemming from workers’ compensation and directors and officers (D&O) claims. The hospitality industry has proven the most affected, with over 488 lawsuits seeking coverage for business income losses.