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Courts show less willingness to consider extravagant policyholder coverage arguments post-COVID

  • Market Insight 20 December 2022 20 December 2022
  • Global

  • Insurance 2023 - the year ahead

Onslaught of litigation has subsided but some changes are here to stay

It is safe to say that, for the COVID coverage litigation, at least 10 years’ worth of insurance claims litigation was conducted in the last two and a half years. Lawsuits regarding COVID coverage claims were so numerous, so intense, and moved so quickly that a large volume of caselaw on multiple issues and in multiple jurisdictions developed very rapidly. Judges dealt with “stretch” arguments and extravagant claims, such as plaintiffs’ claiming there was actual physical damage to a structure caused by the presence of the COVID virus.  

These arguments for broader COVID coverage were overwhelmingly rejected. As a consequence, we are now seeing courts treat policyholders’ arguments in a wide variety of coverage disputes with more scepticism. There will be other ripple effects as well; for example, we are also seeing courts according less deference to a policyholder’s choice of forum, refusing to allow litigation to take place in a location unrelated to where either party is based and forcing policyholders to litigate in a natural or appropriate forum. 

COVID forced the world to do business in new ways, and litigation was no exception. While the frantic pace at which legal business was conducted during COVID has now subsided, we believe that some of the court’s changing ways are here to stay. 

View all our Insurance 2023 Predictions here

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