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Clock ticking on challenging business breaks



With the first anniversary of the COVID-19 blockade approaching, policyholders considering bringing an action for a denied business interruption against their insurance companies should check their policies to see if there is a 12-month time limit for doing so.

Experts say a significant minority of policies have such a deadline, although various state laws may override such policy provisions that give companies more time. Texas, for example, has a two-year limit.

Policyholders only need to file short complaints to meet all deadlines that have arisen and follow up with a more detailed, amended complaint later, they say.

California, Illinois and New York were the first states to be locked up on March 1

9 March 21 and March 22, respectively, before being followed by others.

Approximately 1,500 lawsuits have been filed against insurers for their refusal to pay business interruption claims under their property policy.

Policyholders have used various arguments to secure coverage, including that the presence of the virus or government suspensions related to the virus constitute physical damage that triggers coverage. Insurers often claim that policyholders must have suffered significant damage to their property and also pointed to virus exemptions in many insurances.

Although insurers have in most cases prevailed so far, policyholders have also won a growing number of decisions and some believe that there is now more of a trend towards policyholders' victories.

"A large number" of real estate policies, although not the majority, include the 12-month deadline, which is a major concern for policyholders, says Tamara D. Bruno, a partner with Pillsbury Winthrop Shaw Pittman LLP in Houston.

Cary B. Lerman, a lawyer at Munger, Tolles & Olson LLP in Los Angeles, said: “Obviously, policyholders need to look at their policy. Unfortunately, the policy is written in such jargon that it is difficult for policyholders to really understand what is there, so I would really encourage them to talk to their broker, who probably placed the policy for them.

Policy formulations may vary. significantly, he said.

"There is the question of what a one-year limitation period goes from, even if you have one," he said. Is it from when you "first suffered a loss (or) is it when you knew, or should have known, that you had a claim under the insurance?"

If an insurance company took several months to reject a claim, the courts will usually agree to add that period to the time the policyholder must bring the action, Lerman said.

To be sure, "policyholders with a 12-month insurance policy" really "need" to file their lawsuits within that time, Ms. Bruno said, insurers can agree on a toll agreement, which is a written agreement signed by both parties.

K. James Sullivan, a partner with Calfee, Halter & Griswold LLP in Cleveland, said that some insurance companies could take a hard line and say "no extensions." "

Experts say that state laws differ, with some giving policyholders more time to file a lawsuit. The result is that policyholders need to know what their specific state laws say," says Sullivan. your friend in another state says, "Do not worry." "

The good news for policyholders is that complaints can be short, experts say.

" You do not have to seagull file a detailed trial in a court of law. You can file a complaint that is minimal, "whose purpose is to notify the defendants of a claim against them," Bruno said.

"You are in much better shape if you get something in the archive, even if it's just a couple. pages long ", which simply states that there was a claim that the insurer refused to pay, Bruno said." You can always change your original complaint. "

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