Shortly after the Governor of Louisiana began capping gatherings to help curb the spread of the COVID-19 virus, the owner of Oceana Grill, a restaurant located in New Orleans, filed suit against their insurer Lloyd’s of London. While most of the lawsuits that have been filed by business owners are those that are looking to challenge a coverage decision that was already made (i.e. their claim was denied), the owner of Oceana Grill is seeking something different—a declaratory judgment. According to Bloomberg Law, the owner of Ocean Grill is seeking “an early order from a judge that [states] their claims should be covered.”
If the judge assigned to the case determines that Lloyds of London should cover any losses the restaurant suffers as a result of closing down due to government orders, it could result in other insurers being forced to pay out for business interruption claims associated the COVID-19 pandemic—something insurers say they do not cover.
What is a declaratory judgment?
Many businesses have recently filed a lawsuit against their business insurer, all seeking a declaratory judgment regarding their COVID-19 claims. A declaratory judgment is “a binding judgment from a court defining the legal relationship between parties and their rights in a matter before the court.” While the source highlights that “early declaratory judgment lawsuits are typically filed by insurers looking to determine whether they are expected to provide liability coverage when a policyholder gets into an accident or faced some other type of third-party claim,” it appears policyholders are now initiating the lawsuits.
The source goes on to explain that “a declaratory judgment ruling serves as a sort of instruction in the insurance context, with a judge stating that an insurer either has no duty to cover a claim or is required to do so, with any actual discussion of the amount of money to be paid out to be decided between the parties.” Essentially, what this means is that when a declaratory judgment lawsuit is filed, the court shall determine whether an insurer is liable to cover a claim or not. In the event the judge decides that an insurer is required to provide coverage, then the company shall work with the policyholder to determine how much should be paid out.
Now, if you own a business in Louisiana and your business interruption claim was denied, now would be a good time to contact USAttorneys.com. Whether you are considering suing your insurer or would like more information on how to challenge your insurer’s decision outside of the courtroom, the Louisiana insurance claim denial attorneys USAttorneys.com can connect you with are qualified to help you.