Insurers’ COVID-19 Notepad: What You Need To Know Now – Week of November 22, 2021

Courts reject requests to stop COVID-19 activities

On November 15, 2021, the Fourth Court of Appeals for the California District of Appeals upheld the trial court’s decision in favor of California Mutual Insurance Company in a key state appeals court decision for insurers. The court ruled that a hotel’s loss of business income due to the coronavirus pandemic was not covered by the insurance policy. The court first concluded that the suspension of hotel operations was not caused by “direct physical problems.” . . damage to »his property. Order at 22. Rather than giving the orders due to the presence of the virus at the hotel, the orders were issued due to the presence of the virus throughout the community. Identifier. at 33. The court also found that civil authority coverage was excluded because the orders had not been made “due to direct physical loss or damage to” a property. Identifier. to 32. The case is Inns by the Sea v. California Mutual Insurance Co.

On November 18, 2021, the Delaware State Superior Court granted HDI Global Insurance Company’s motion to dismiss the COVID-19 business interruption claim of a water park owner and operator. The court ruled that the plaintiff’s claim was excluded by the exclusion of pollution and contamination from his policy. Order at 14. The case is APX Operating Co., LLC v HDI Glob. Ins. Co.

On November 12, 2021, the District Court for the District of Massachusetts granted RSUI Indemnity Company’s motion to dismiss a COVID-19 business interruption claim filed by the operator of several restaurants, bars, pubs and venues. Entertainment. The court found that “physical loss” or “damage” under Massachusetts law “requires that the cause of the loss or damage be tangible alteration of the property itself.” Order at 8. Thus, the court concluded that the insured could not establish the cover, because he “does not allege facts showing that [the presence of COVID-19 at its locations] caused material damage to one of his insured property. Username. to 13. The court further concluded that the exclusion of pathogens from the policy excluded coverage. Username. to 17. The case is Glynn Hospitality Group, Inc. v. RSUI Indem. Co.

On November 15, 2021, the District Court for the Southern District of Iowa granted Zurich American Insurance Company‘s motion to dismiss a COVID-19 business interruption claim filed by the owner and operator of various entertainment companies. The court concluded that “[u]According to an analysis in the plain and ordinary sense of the term “direct physical loss or damage to property”, coverage is not extended to purely economic losses caused by or resulting from government shutdown orders related to COVID. »Order at 9. The case is Great River Entertainment, LLC v. Zurich Am. Ins. Co.

On November 18, 2021, the District Court for the Southern District of New York granted the motion of Sentinel Insurance Company, Ltd. to dismiss a COVID-19 business interruption claim filed by the owner and operator of a fine-dining restaurant. The court concluded that the insured did not plausibly allege “direct physical loss or physical damage to” his property, because “courts under New York law have consistently held that loss of use of an insured’s premises does not trigger Business Income coverage where the policy provides that such coverage requires proof of physical damage or loss. Order at 7-8. The case is Torches on the Hudson, LLC, et al. v. The Sentinel Ins. Co., Ltd., et al.

On September 30, 2021, the District Court for the Southern District of Illinois granted The Cincinnati Insurance Company’s motion to dismiss a gaming company’s COVID-19 business interruption claims. Noting that “[t]The vast majority of federal courts that have considered the matter have denied coverage, ”the court ruled that the presence of COVID-19 on a business’s premises did not constitute a material change or alteration in ownership sufficient to constitute direct physical loss. Order at 9, 16. The court also ruled that the plaintiff had not made a claim under the provisions of the civil authority of his police because access to the covered premises was not prohibited and, even in assuming the presence of COVID-19 could constitute direct physical loss, the relevant civil authority orders “were in response to the pandemic in general, rather than due to COVID-19 contamination at a property neighbor”. Identifier. at 28. Finally, because the policy did not provide coverage for the plaintiff’s claims, the court dismissed the plaintiff’s bad faith claims. Identifier. to 32. The case is VZA, LLC v. The Cincinnati Ins. Co.

On September 30, 2021, the District Court for the Southern District of Illinois granted The Cincinnati Insurance Company’s motion to dismiss an alleged class action lawsuit by an orthodontist firm for COVID-19 business interruption. The court ruled that the presence of COVID-19 on a business premises did not constitute a material change or alteration in property sufficient to constitute direct physical loss. Order at 16-17. The court also ruled that the plaintiff had not made a claim under the civil authority provisions of his police because access to the covered premises was not prohibited and, even assuming that the presence of COVID-19 could constitute direct physical loss, the civil authority orders in question “were in response to the pandemic in general, rather than due to contamination with COVID-19 at a neighboring property.” Identifier. at 28-29. Finally, because the policy did not provide coverage for the plaintiff’s claims, the court rejected the plaintiff’s bad faith claims. Identifier. to 33. The case is Midwest Orthodontic Assocs., Ltd. vs. The Cincinnati Cas. Co.

On September 30, 2021, the District Court for the Northern District of Illinois granted Cincinnati Insurance Company’s motion to dismiss a country club operator’s COVID-19 business interruption request. The court concluded that the ordinary meaning of the police “direct accidental physical loss” requirement was that the police “require[s] some form of actual physical damage to the insured property to trigger the coverage ”, Order at 5, and that the insured’s claim that the droplets of COVID-19 transformed the air of the property and landed on objects and surfaces “does not result in physical alteration, or tangible or tangible loss or damage.” Username. to 6. The case is Valley Lo Club Ass’n, Inc. v. The Cincinnati Ins. Co.

New business interruption lawsuits against insurers:

On November 17, 2021, an event hosting group sued Houston Casualty Company in U.S. District Court for the District of New Hampshire for declaratory relief, breach of contract, reform and bad faith. The group sued the insurer for its inability to provide event cancellation coverage when it canceled events due to the coronavirus outbreak. Complaint ¶ 3. According to the claimant, the insurer denied the claim due to a coronavirus exclusion. Identifier. ¶ 46. The case is International Association of Privacy Processionals, Inc. v. Houston Casualty Co.