March 08, 2021

Former AAHOA chairman suing insurance company for COVID-19 losses on unpaid business interruption insurance claim

A former AAHOA chairman and California hotelier has filed suit against his insurance company, for denying coverage on his business interruption insurance policy in connection with losses incurred from the COVID-19 pandemic. It’s a situation in which many other hotel owners with similar policies find themselves, Tarun Patel and his attorneys said.

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“We have several lawsuits throughout the country on behalf of numerous businesses in different industries that are being impacted in just the way that Tarun has been impacted,” said Geoffrey Graber, partner at Cohen Milstein Sellers & Toll and a member of the firm’s COVID-19 Business Interruption Insurance Coverage Task Force. “Frequently these involved small to medium size companies, a lot of family businesses that have been absolutely devastated because, among other things, they're not getting what they paid for. They paid the premiums, they paid extra for this type of coverage and they’re being left high and dry.”

Sequoia is not the only insurer to simply not respond to claims, Graber said.

“Generally speaking, this is not the only case we've seen where the carrier is ignoring claims that have been made by the policyholder,” he said.

In those lawsuits that do go before a judge, typically the courts are addressing issues related to covered cause of loss and whether the claims that are being made under these policies are covered.

“There are certain exclusions for pollution or microbes or viruses and courts have sometimes addressed those issues as well. But I have not seen a lot of cases dealing with force majeure clauses,” Graber said.

He said it’s hard to say if Sequoia’s non-response to the claim and, so far, the lawsuit will be to their advantage in litigation.

“At the end of the day, that'll be for the court to decide,” Graber said. “But I think from a commonsense standpoint, I think it speaks volumes, if you're making a claim and the other side doesn't respond, doesn't give you a determination on your claim. I think most people will look at that and be able to draw their own obvious conclusions.”

The complete article can be accessed here.