As we anticipated back in May, there has been a significant increase in litigation relating to business interruption insurance coverage for losses attributable to COVID-19 restrictions. Restaurant policyholders, in particular, have been at the forefront of raising these disputes.

These cases have mainly centered on the applicability of two common provisions in insurance policies: (i) Business Income Coverage provisions and (ii) Virus or Micro-organism Coverage exclusions. Most business income coverage provisions provide that coverage is available for loss of income sustained during necessary suspensions of operations caused by “direct physical loss of or damage to property.” [1] However, most policies also contain coverage exclusions “for loss or damage caused by or resulting from any virus, bacterium, or other micro-organism.”[2]