Redesigning Widespread Insurance Coverage Disputes : A Case Study of the British and American Approaches to Pandemic Business Interruption Coverage

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In the subsequent two years, U.S. businesses filed well over 2,000 lawsuits in state and federal courts seeking Business Interruption (BI) insurance coverage for closures associated with the pandemic. Notwithstanding this “nationwide flood of insurance-related litigation,” clear answers regarding insurers’ coverage obligations remain elusive two years into the pandemic; although courts have dismissed a significant majority of these lawsuits, policyholders have scored a meaningful number of victories in federal, and especially state, courts. This chaotic and costly process for resolving pandemic-related BI coverage disputes contrasts sharply with the experience of the United Kingdom. Within eight months of the pandemic’s onset, the legal obligations of British BI insurers had been definitively resolved through a novel “test case scheme” led by the country’s primary market conduct regulator for financial firms, the Financial Conduct Authority (FCA). Focusing on these divergent experiences, this Article suggests that the United States can substantially improve its process for resolving future widespread insurance coverage disputes by adopting a limited reform that is inspired by the British test case scheme. In particular, the Article proposes that states should consider empowering their insurance department and attorney general to request that federal courts adjudicating cases raising novel coverage questions implicated in emerging and widespread coverage disputes certify those questions to the state’s supreme court. It concludes by suggesting that affirmative efforts by states to encourage federal courts to certify key questions of state law could help to promote the fair and efficient resolution of widespread disputes even outside of the insurance domain