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Falls Lake National Insurance No Payout for Covid-19 Closures Class Action

At the beginning of the Covid-19 pandemic, businesses around the country were forced to close their doors for a time to avoid spreading the disease. But many of them are finding that their insurance carriers are unwilling to pay for these interruptions of business. The complaint for this class action alleges that Falls Lake National Insurance Company is refusing to pay out on its all-risk commercial policies for lost business income.

The class for this action is all policyholders in the US who bought commercial property coverage, including business or interruption coverage and extra expense coverage from Falls Lake, and who have been denied coverage for lost business income after being ordered by a governmental entity, because of the Covid-19 pandemic, to shut down or otherwise curtail or limit their business operations.

Mancari’s Chrysler Jeep, Inc. maintains a car dealership showroom in Oak Lawn, Illinois. It had to close its showroom on March 24, 2020.

Mancari’s was covered under an all-risk commercial property policy from Falls Lake that provides coverage for business losses for “direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.”

The policy does not define “direct physical loss of or damage to” in its terms. However, the complaint points to the word “or” and alleges that the phrase “means that coverage is triggered if either a physical loss of property or damage to property occurs.”

It further claims, “Physical loss of, or damage to, property may be reasonably interpreted to occur when a covered cause of loss threatens or renders property unusable or unsuitable for its intended purpose or unsafe for ordinary human occupancy and/or continued use.”

In addition to coverage for business losses, the policy provides coverage for extra expenses and “for business income losses resulting from an ‘action of civil authority’ which prohibits access to the Covered Property, related to a ‘Covered Cause of Loss’ at property other than the Covered Property.”

According to the complaint, this civil authority provision is relevant because state governments issued orders relating to stopping the spread of Covid-19: “On March 20, 2020, Governor Pritzker issued an Executive Order mandating that residents stay home, and closing all non-essential businesses within the State, including [Mancari’s] business.”

The complaint alleges, “Car dealerships … were among the hardest-hit businesses during Covid-19.”

The complaint insists that Covid-19 causes loss of or damage to property because “the contact and interaction necessarily incident to such businesses causes a heightened risk of the property becoming contaminated.” Other states have specifically recognized that the disease caused physical loss or damage of property.

Mancari’s submitted a claim for business income losses to Falls Lake, but the company has refused to make a payout, saying that the suspension of business “was not caused by ‘direct physical loss of or damage to property…’ and was not caused by a ‘Covered Cause of Loss.’”

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Falls Lake National Insurance No Payout for Covid-19 Closures Class Action

October 14, 2021

At the beginning of the Covid-19 pandemic, businesses around the country were forced to close their doors for a time to avoid spreading the disease. But many of them are finding that their insurance carriers are unwilling to pay for these interruptions of business. The complaint for this class action alleges that Falls Lake National Insurance Company is refusing to pay out on its all-risk commercial policies for lost business income.

Falls Lake National Insurance No Payout for Covid-19 Closures Class Action

Case Event History

Falls Lake National Insurance No Payout for Covid-19 Closures Class Action

October 14, 2021

At the beginning of the Covid-19 pandemic, businesses around the country were forced to close their doors for a time to avoid spreading the disease. But many of them are finding that their insurance carriers are unwilling to pay for these interruptions of business. The complaint for this class action alleges that Falls Lake National Insurance Company is refusing to pay out on its all-risk commercial policies for lost business income.

Falls Lake National Insurance No Payout for Covid-19 Closures Class Action
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance