In a matter of first impression, on May 22, 2020 the Paris Commercial Court in Paris, France ruled that a group of restaurants claims for revenue loss due to the COVID-19 pandemic were covered under business interruption insurance policies issued by AXA Insurance Company.
AXA, one of the largest insurance companies in the world, initially signaled its intent to appeal the French Court’s ruling, but has since changed course and agreed to pay the claims.
AXA initially denied the restaurant’s claims, asserting the applicable policies did not cover business interruption caused by COVID-19. The restaurants then sued AXA in French court, seeking coverage for operating losses resulting from a French government shutdown order issued in response to the pandemic.
The French court rejected AXA’s coverage position and determined that the French government’s shutdown order for restaurants and bars, due to COVID-19, was a triggering event under the policies, obligating AXA to provide coverage. The Court further ruled that if AXA had intended to exclude the risk of global pandemic from its policies, it should have done so expressly and clearly within the policies themselves.
More importantly, AXA has since conceded that its business interruption policy exclusions are ambiguous, opening the door to further claims from insured’s that the policies should provide coverage for COVID-19 business closure impacts.
The French Court’s ruling has opened the floodgates to litigation in the United States advancing similar arguments related policy exclusions and ambiguities. Whether United States courts will adopt the French Court’s reasoning remains to be seen. On May 29, 2020 iconic fast food restaurant In-N-Out Burger filed a similar lawsuit against its insurer, Zurich American Insurance Company seeking coverage for business interruption.
This story is an important reminder for businesses impacted by COVID-19 to review their business interruption policies very carefully to determine whether coverage may in fact be triggered by COVID-19 and consult with their broker and confer with legal counsel should the possibility of coverage be afforded.
The information contained herein is not advice and should not be treated as such. You must not rely on the information as an alternative to legal advice from an appropriately qualified attorney.