Do Act of God Clauses Include COVID-19?

Following the SARS outbreak in 2002, many business interruption insurance policies started including an exemption for pandemics caused by a viral or bacterial outbreak. But even those that do not specifically reference a pandemic are likely to have a catch-all “Act of God” clause, possibly with some exceptions listed or covered in a separate policy. It’s likely that few if any “pandemic-specific policies” were written.

Traditionally, an “Act of God” has meant something like a natural disaster such as a tornado or hurricane leveling an office or factory incapacitated like from a flood that wiped out an entire community. But it may become a disputed question whether the coronavirus ravaging Pennsylvania now was an “Act of God” when the lockdown imposed by Pennsylvania’s governor is relaxed or ends and companies begin filing claims to cover their lost revenue and fixed costs.

To begin preparing to defend against potential lawsuits alleging that COVID-19 was not an Act of God when an insured files a business interruption claim, there are steps insurance companies in Pennsylvania can start to take now while the lockdown remains in force.

Thought Process Documentation

As attorneys who have focused on defending insurance companies in Pennsylvania courts for over 20 years, we know from experience that judges and juries always put a lot of stock in a defendant’s paper trail.

Despite the SARS situation, few people outside of government immunologists anticipated anything like the current COVID-19 pandemic. Yet now that we are living in the midst of one, insurance companies should begin digging through electronic and hard-copy files to find minutes of meetings attended by actuaries and executives, any resulting memos and reports, and emails that document the company’s thinking about what was considered to be an Act of God as business interruption insurance products were being created.

Granted, some of the information may be decades old. But in the case of evidence needed to refute a plaintiff’s allegations, the age of the information is a plus because it can prove to be even more potent and have an even bigger impact on a jury or judge than something discussed and considered more recently.

Being able to demonstrate that “This was our thinking in 1987 or in 2002, and it’s still our thinking today” can make those weighing the evidence sit up and take notice.

Before The End is Near

The time to begin preparing a defense should be well before a claim is made. And while the end to the pandemic lockdown may not be clearly in sight today, it will come.

The insurance defense lawyers at the Sherr Law Group have a long history of defending carriers against complex and complicated claims stemming from business interruption policies. If you want to discuss how the language in policies written by your company might be viewed in court, please feel free call me or any of our Sherr Law Group attorneys in Bala Cynwyd, Collegeville, Conshohocken, Harrisburg, King of Prussia, Montgomery County, Narberth. Norristown, Philadelphia, Scranton, and Whitpain Hills Pennsylvania.

Our electronic infrastructure enables the Sherr Law Group insurance attorneys to be in touch with each other and we have access to client files, We can meet with you in our video conference room, answer questions by email or talk with you when you call us at 484-591-3000.

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