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Abstract

The onset of the COVID-19 pandemic in early 2020 impacted all walks of American life. Litigation and insurance coverage disputes were no exception. In addition to the impact on dispute resolution procedure (e.g., postponed trials, masked trials, the rise of remote depositions, hearings, and oral argument), there were more than two thousand insurance coverage lawsuits spurred by pandemic-related restrictions on business operations and the resulting lost revenue.

Entertainment and retail venues not deemed “essential” were particularly impacted due to both official government orders closing or restricting operations as well as reduced customer demand stemming from fear of infection. Although some policyholders with the right mix of risk management in place obtained insurance coverage, most were denied benefits in what proved to be a historically unprecedented wave of insurer victories that not only restricted recovery for standard fare business interruption coverage but also potentially altered the landscape of insurance law.

Covid coverage litigation in Nevada provided examples of both specialized coverage battles and disputes involving the more common business interruption provisions of standard commercial property policies. Businesses in Nevada enjoyed some degree of success at the state trial court level but were largely unsuccessful in federal court. The Nevada Supreme Court ruling for insurers in JGB Vegas Retail v. Starr Surplus Lines in September 2023 was a decision potentially serving as a close-to-final nail in the coffin of policyholder claims pursuant to basic commercial property insurance.

The long-term impact of the COVID-19 coverage litigation remains to be seen but likely will prompt a shift in risk management strategy for businesses serving the public, particularly entertainment venues. In addition, these cases risk undoing decades of precedent favoring policyholders regarding insurance policy trigger. The pandemic litigation may thus prove to have been both a financial and jurisprudential windfall for the insurance industry.

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