A class action lawsuit has been filed against The Hanover Insurance Group and one of its subsidiaries, Citizens Insurance Company of America, over their denial of business interruption insurance claims in the state of Michigan.
The lawsuit was filed in the US District Court for the Eastern District of Michigan.
On March 24, 2020, Michigan Governor Gretchen Whitmer issued Executive Order No. 2020-21. The order required all non-essential workers to stay at home, and for businesses uninvolved with maintaining critical infrastructure to close operations. The plaintiffs of the class action were all subject to the order, and were not exempted.
The lawsuit alleges that the plaintiffs each purchased a standard-form all-risk “Businessowners Coverage Form” property and casualty insurance policy from either The Hanover or Citizens Insurance. The plaintiffs also maintained that the policy promised to cover direct physical property loss or damage. They also said that under a “Civil Authority” provision, the defendants were to pay lost net income, payroll costs, and other business expenses if the plaintiffs’ businesses were “suspended” for whatever non-excluded reason.
But when the statewide shutdown order forced them to suspend their operations, the plaintiffs claimed that the defendants invoked a “virus exclusion” to deny all business interruption coverage claims related to the COVID-19 pandemic.
“At a time when the global coronavirus pandemic is wreaking havoc on public health and the US economy, insurance companies are engaging in a public campaign declaring that COVID-19-related claims aren’t covered,” said Andrew Kochanowski, an attorney from Sommers Schwartz PC representing the plaintiffs.
Kochanowski added that both Hanover and Citizens “conveniently – but wrongly – interpret the virus exclusion in their favor,” arguing that the pandemic was not the direct cause of his clients’ property damage, nor were any of the businesses suspended because their premises needed to be decontaminated.
“The shutdown caused the losses, not the coronavirus,” the attorney maintained in a statement.
The plaintiffs seek damages from the alleged breach of contract and a declaratory judgment that the defendants’ policies provide coverage for loss of business income and expenses caused by the shutdown order.