Hanover Insurance Refusal to Pay Covid-19 Business Losses Class Action

When businesses buy insurance, they can select coverage for business interruptions, to cover losses and extra expenses incurred when normal operations are interrupted due to physical loss or damage to the property. The Hanover American Insurance Company and the Hanover Insurance Group, Inc. sell such coverage, the complaint for this class action claims, but is refusing to cover businesses when such losses are related to Covid-19.

KMOD Fit, LLC has two gyms in North Carolina covered by an all-risk commercial business insurance policy with Hanover. As part of its policy, KMOD paid extra for Business Income and Extra Expense coverage as well as for Civil Authority coverage.

The policy is quoted in the complaint as saying, “We will pay 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 Covered Causes of Loss are described as “direct physical loss unless the loss is excluded or limited in this policy.”

Additional coverages provide for loss of business income and extra expenses during suspension of operations caused by a Covered Cause of Loss during a period of restoration.

The Civil Authority coverage is supposed to pay for losses of business income and extra expenses sustained, “caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss.”

On March 23, 2020, the Governor of North Carolina issued an emergency order that forbid the physical operations of gyms in the state. This included KMOD’s two gyms.

On September 4, 2020, gyms were allowed to reopen, but at only 30% capacity.

KMOD has thus lost business income and continues to lose it, because of the actions of civil authorities.

KMOD filed a claim with Hanover under its insurance policy, but Hanover has refused to pay it.

The complaint defines three nationwide classes for this action.

The Business Income Coverage Class is all gyms, health clubs and fitness centers that bought Business Income and Extra Expense coverage with an insurance policy issued by Hanover, covering any portion of the time between March 1, 2020 and the present, where the business had a suspension of operations due to government prohibitions on the physical use of their premises, and where the business gave Hanover notice of this but Hanover refused to fully cover the losses.

Additionally, the complaint defines an Extra Expense Coverage Class, a Civil Authority Coverage Class, and a Massachusetts Subclass. These are defined on pages 13 and 14 of the complaint, linked below.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Hanover Insurance Refusal to Pay Covid-19 Business Losses Complaint

November 6, 2020

When businesses buy insurance, they can select coverage for business interruptions, to cover losses and extra expenses incurred when normal operations are interrupted due to physical loss or damage to the property. The Hanover American Insurance Company and the Hanover Insurance Group, Inc. sell such coverage, the complaint for this class action claims, but is refusing to cover businesses when such losses are related to Covid-19.

Hanover Insurance Refusal to Pay Covid-19 Business Losses Complaint

Case Event History

Hanover Insurance Refusal to Pay Covid-19 Business Losses Complaint

November 6, 2020

When businesses buy insurance, they can select coverage for business interruptions, to cover losses and extra expenses incurred when normal operations are interrupted due to physical loss or damage to the property. The Hanover American Insurance Company and the Hanover Insurance Group, Inc. sell such coverage, the complaint for this class action claims, but is refusing to cover businesses when such losses are related to Covid-19.

Hanover Insurance Refusal to Pay Covid-19 Business Losses Complaint
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance