Bracewell’s Vince Morgan discussed with Law360 how the recent outcome of COVID-19 insurance litigation has come down to policy wording.
In Terry Black’s Barbecue LLC v. State Automobile Mutual Insurance Co., the Fifth Circuit found that a Texas district court got it right when it said Terry Black’s Barbecue in Austin could not recoup losses stemming from the virus and related government orders limiting business.
“That’s the lesson here — it’s not that the rule is X or Y,” said Morgan. “It’s that courts take a real hard look at what your policy says, and then take a real hard look at what you say happened, and they compare those two.”
Morgan said virus exclusions in insurance policies, or provisions that allow businesses to bring claims for virus-related business interruptions, have become the standard in the wake of the pandemic. As insurance cases continue to make their way through the courts, it is possible major insurers could change their policy wording in ways that line up with major court decisions.
“If [an insurer] is so sure that none of these claims are covered, then why do you need to amend your policy to add a new virus exclusion? That’s a really tough question for the carriers to answer,” added Morgan. “I do think that after this wave of case law is done — probably in the next I’d say two, three, four years — this will be something that is the subject of some policy wording changes.”
