SoCal Businesses Sue Insurance Companies For Denying COVID-Related Claims

A number of Southern California businesses have sued various insurance companies, claiming the insurers breached contracts by denying coverage for certain losses due to COVID-19.

Many of the complaints come from restaurants that were ordered to temporarily close due to the pandemic.

Insurers have been denying claims because the properties did not suffer physical damage, according to Jessica Williams, a lawyer with The Gomez Firm, an L.A. practice representing some plaintiffs.

Williams said her firm has filed several suits — most of them against Farmers Insurance — on behalf of dozens of plaintiffs. She added that businesses in L.A. and Orange counties are constantly joining as plaintiffs.

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Williams compared pandemic losses to those caused by a flood or a fire.

“The virus is physical, even though it can be microscopic. So we're arguing, you know, that it does have physical attributes,” she said.

Williams pointed out that many businesses had no choice but to close their doors or cut back services under public health orders.

“Fire cases are another good example where they'll mandate that you can't be on your property and they'll actually come physically remove you,” she said.

Williams said some of her clients suffered millions of dollars in losses.

Farmers said in a statement that it understands COVID-19 has been difficult for local businesses, but added, "the claims for COVID-19 related damages, including those resulting from governmental stay-at-home orders are not covered under the policy and are subject to applicable policy exclusions."

Williams said there are many similar lawsuits being filed against insurance companies across California and the U.S.

She said the various suits against Farmers in California are being considered in court as a "mass tort action," meaning the ultimate ruling will apply to each one.