As we approach the one-year anniversary of COVID-19-related closures and losses, policyholders should assess whether they need to commence a coverage lawsuit against their property and business interruption insurers to preserve their insurance claim.

• Limitation of Actions. Some property and business interruption policies contain a “limitation of action” or “suit against company” provision, which insurers will argue requires a coverage lawsuit to be commenced within a certain period of time or it is forever barred. Also consider when the “clock” starts to run (e.g., from the date of loss, date of claim, date of denial).
• Tolling Agreement. If a policy does contain a limitation of action provision, consider asking the insurer to enter into a tolling agreement or otherwise waive the limitation of action provision to avoid the need to file a lawsuit in the short term.
• Void for Public Policy? Some states refuse to enforce certain contractual limitation periods on grounds that they are too narrow, while other states may enforce them. Don’t be caught off guard. If insurers do raise a time-bar defense, also consider whether governmental COVID-19 orders or legislation extended the limitations period.
• Choice of Law Matters. Based on the above, keep in mind that jurisdiction and choice of law matter. It is also important to review amendatory endorsements in policies, which may extend the time period if required by state regulations.