Insights

The Pandemic of 2020 has caused seismic challenges around the world. Entire segments of economies have shut down, resulting in massive unemployment and lost revenue. 

Consumers and businesses have been seeking financial relief. Government programs are not nearly enough. Businesses have been filing business interruption claims with their insurance companies, and carriers are routinely denying based on policy exclusions. As a result, a tidal wave of contract and class action insurance claims is on its way. 

This post shares examples and recent articles.

Commercial Insurance Class Actions

Aggrieved business owners (particularly restaurateurs) have been filing a new breed of class actions, collectively seeking “lost revenue coverage” due to pandemic related business interruption, as reported in the New York Law Journal.

Until now, insurance class action lawsuits typically consisted of small-value claims arising from personal insurance lines. In recent class filings, however, commercial plaintiffs claim business interruption qualifies as a “covered loss.” Commercial insurance carriers are fighting these COVID-related claims, alleging the pandemic was an unforeseen event either not covered under the policies or subject to policy exclusions.

Are class actions the appropriate mechanism to resolve large numbers of commercial insurance disputes? It could streamline the process and contain costs and resources, especially since these claims involve losses under the same or similar policy language. Further, courts appear to be motivated to embrace class actions to resolve commercial insurance claims as they will be overwhelmed by coverage litigation. Given the complexities of business insurance policies coupled with varying definitions of “covered losses”, it may be challenging for plaintiffs to navigate.

Force Majeure” Contract Litigation

Nonessential companies shut down by government fiat have found it challenging to perform their contractual obligations, leading to a wave of litigation. Parties to contracts are now citing force majeure (which eliminates liability for natural or unavoidable events) to excuse nonperformance.

For example, those unable to purchase raw materials or parts at prices that leave room for profit due to COVID-19 may seek to rely on force majeure. See the New York Law Journal story: COVID-19 and the Future of Business Contracts.

Workplace Liability for COVID-19 Exposure

Some businesses are requiring returning workers to sign waivers indemnifying employers against COVID-19 infection in the workplace. Companies claim they are vulnerable to lawsuits if they reopen (arguably) prematurely. These companies are pushing Congress for temporary legal protections to help get the economy running again. Congressional Democrats and labor unions have fiercely opposed, claiming some businesses are doing too little to protect vulnerable workers. A liability shield, however, may encourage reckless behavior, as reported in the New York Times.

In this heated environment, it is not clear how these gambits will unfold. We can expect a tidal wave of new litigation that will clarify and possibly reorder business contracts and insurance coverage on a broad scale.

How can RapidFunds help? By advancing cash for your settled cases awaiting payment. 

You can use that funding to jumpstart your next wave of litigation: commercial class actions, force majeure contract litigation, or workplace liability cases.

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