Liability Insurance Posts
Infected Judgment: Problematic Rush to Conventional Wisdom and Insurance Coverage Denial in a PandemicJeffrey W. Stempel and Erik Knutsen
The COVID-19 pandemic created not only a public health crisis but also an insurance coverage imbroglio, prompting near-immediate business interruption claims by policyholders impacted by government restrictions ordered in response to the pandemic. Insurers and their representatives “presponded” to the looming coverage claims by quickly moving to denigrate arguments for coverage, engaging in a pre-emptive strike that has largely worked to date, inducing too many courts to rush to judgment by declaring—as a matter of law—that policy terms such as “direct physical loss or damage” do not even arguably encompass the business shutdowns resulting from COVID-19.
ALI Restatements of the Law have traditionally exerted significant influence over court decisions and the development of the common law. During the past two decades, however, the ALI has seen an upsurge in interest group activity designed to shape or even thwart aspects of the Institute’s work.
On April 19, 2021, the Supreme Court of Georgia issued its opinion on the case in response to the Eleventh Circuit’s certifications. In its discussion of the background principles of law, the court cites Comment a of § 27, Remedies for Breach of the Duty to Make Reasonable Settlement Decisions, of Restatement of the Law, Liability Insurance.
While the ALI’s Restatement of the Law, Liability Insurance got off to a slow-start for the first three years, playing a substantive role in just a handful of several dozen decisions citing to it, do these four recent decisions, over three weeks, foretell a new story?
In its Decision and Order on Cross-Motions for Summary Judgment (2021 WL 681119), the District Court of Maine was presented with the issue of when a duty to defend terminates. The court looked to Section 18 of Restatement of the Law, Liability Insurance (Restatement) for guidance.
A Law360 article discusses a recent case in which a Minnesota dental office argued that “more courts across the country have rejected insurers’ bids to dismiss COVID-19 business interruption suits for policies without a virus exclusion.”
Tom Baker of the University of Pennsylvania Carey Law School is the creator of the Covid Coverage Litigation Tracker, which provides empirical research on insurance disputes and resolutions during the pandemic. He spoke recently about the project on an episode of the podcast “Case in Point.”
At its 2018 Annual Meeting, The American Law Institute completed nearly a decade’s worth of work on the Restatement of the Law, Liability Insurance. The Restatement’s approval was deferred for a year from the 2017 Annual Meeting, largely because of opposition from insurance industry interests. The Restatement attracted unusual attention from interests outside the normal ALI process, in a way that can be fairly characterized as political, in the non-pejorative sense that it involves the authoritative allocation of values.
An article from Law360 examines the way that several states are addressing COVID-19 related liability insurance questions and concerns as businesses begin to reopen.
An article from Law360 addresses recent action from the U.S. Chamber of Commerce and trade organizations calling on Congress to pass legislation protecting businesses from legal liability as they reopen.