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🤷🏽♀️ The Covid force majeure clause isn’t working so well in lawsuits
Force majeure has been everybody’s favorite legal phrase during the pandemic. But so far companies trying to cash in on insurance settlements for pandemic-caused business interruptions haven’t had much luck, according to Law.com.
It’s not just a contractual language issue: Companies seeking insurance claims for Covid interruptions must also usually show a direct physical loss. That has been difficult to prove. “It’s not designed to insure against a bad business climate,” Rutgers Law professor Adam Scales told Law.com. “It is designed to deal with calamities that befall your business.”
A 2% lawsuit filing rate: Another lawyer, John Randy Sawyer of Stark & Stark, has reviewed more than 100 business insurance policies for clients. He’s filed two lawsuits so far. Many of the policies he has not acted upon actually use a virus as an exclusion to a business interruption.
And there’s been no major consolidation of lawsuits: In a federal court, plaintiffs’ attorneys wanted to package hundreds of lawsuits for business interruptions together. The judge denied the action.
Business interruption lawsuits could have greater success as the pandemic further unfolds, according to legal analysts. In fact, one federal judge in Missouri let a lawsuit proceed after agreeing Covid has led to direct physical loss -- because of the physical disease particles attaching to and damaging property.