COVID-19 Insurance Coverage Update

In a prior post, I predicted that “if history is any guide, policyholders may win most of the coverage cases” for COVID-19 related claims. I stated that my “prediction is based on the insurance industry’s experience in litigating various policy issues for environmental claims coverage 30 years ago.”

Apparently, I was prescient in my likening the COVID coverage claims wars to the environmental coverage claims wars. For in reading news accounts, it appears that policyholder coverage attorneys are doing their best to link COIV-19 claims to environmental claims by likening COVID-19 clean-up or property damage claims to pollution clean-up or property damage claims or COVID-19 exposure claims to exposures to asbestos fibers or exposure to toxic vapors or fumes.

Another big tie in with the environmental coverage wars is how policyholder attorneys are taking on insurers. I am noticing that they are taking a page out of their environmental coverage claims wars playbook and are zeroing in first on smaller insurers. I know this is occurring as I am seeing TV ads trolling for claimants who have policies with specific insurers who are mostly smaller insurers.

Taking on smaller insurers first is a pretty smart tactic on the part of policyholder attorneys. This is because smaller insurers as a general rule tend to stick with their local coverage attorneys.  They rarely hire the sophisticated BIG law firm coverage attorneys that the larger insurance companies hire.

The basic idea in taking on the smaller insurers first is that they will not be able to mount a formidable defense. If so, it would be easier to establish some favorable case law and gain some momentum in the COVID -19 coverage claims wars. Also, you may be able to get some easy settlement money to fund coverage cases with larger insurers.

As noted, taking on smaller insurers first was exactly the tactic that policyholder attorneys in large firms employed in the insurance coverage wars. To respond to this, insurers in larger companies formed the Insurance Environmental Litigation Association (IELA) and I was its Treasurer. One of our primary purposes was to intervene in coverage cases – especially those involving smaller insurers whose attorneys were simply overmatched by the policyholder attorneys at large law firms.

I think it unlikely that BIG insurers will once again form a group like the IELA to intervene in COVID-19 coverage cases involving smaller insurers and their overmatched coverage counsel. For one thing, there may  not be enough time to do so. I sense that the COVID-19 coverage claims wars will proceed to conclusion much faster than the environmental coverage claims wars.

Because of the high stakes involved in the COVID-19 coverage wars, it is incumbent on policyholders and insurers – and especially smaller insurers – to heed the advice I gave in my prior post. Make sure you hire competent coverage counsel who are in large regional or national firms. I know that what I am advising you to do is a more expensive course of action, but believe me if you do not hire the right coverage counsel and the other side does, you likely will wind up losing your own COVID-19 coverage claim war.