Courts allow COVID-19 claims by insureds with policy endorsements for illnesses

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THE BHARAT EXPRESS NEWS INSURANCE NEWS
THE BHARAT EXPRESS NEWS INSURANCE NEWS

As insurers continue to win four out of five cases in the first rounds, over the past month two homeowners with policies containing endorsements specifically covering illnesses have survived motions to dismiss their COVID business interruption claims. -19.

The Stark County, Ohio Common Plea Court on Thursday dismissed State Automobile Mutual Insurance Co.’s petition to dismiss a lawsuit filed by the owners of Sylvester North End Italian Grille in North Canton seeking damages – interest for lost income after being forced to close his dining room due to the COVID-19 pandemic. Judge Taryn L. Heath cited an approval of the policy that specifically added coverage for income lost due to “contagious or infectious diseases”.

On December 21, the U.S. District Court in San Diego dismissed Markel Insurance Co.’s motion to dismiss a business interruption lawsuit filed by Baldwin Academy, a private preschool. Judge Marilyn L. Huff said she could not conclude without further evidence that a “communicable disease” approval in school policy did not cover income that was lost after the school was closed. was forced to close after one of her student’s parents contracted COVID-19.

Claims Journal previously reported that policies with no virus exclusions performed better in the early rounds than those with exclusions in their policies, although there were still more wins for insurers than policyholders.

Akron, Ohio law firm Tzangas Plakas Mannos said in a press release that Sylvester’s case was one of seven lawsuits the firm was pursuing on behalf of Stark County restaurateurs and Summit whose allegations of business disruption were dismissed.

“Situations like this are exactly why Sylvester and other local businesses and their hardworking business owners have made a significant financial investment in business interruption coverage,” said attorney Gary. A. Corroto. “We are committed to doing all we can to achieve financial justice for Sylvester, and our many other customers for whom we fight and whose business interruption claims have been unfairly dismissed.”

A litigation tracker run by Carey Law School at the University of Pennsylvania shows 1,320 lawsuits have been filed in state and federal courts to seek coverage for business income lost due to COVID-19 closures . In cases leading to initial decisions, insurers won 107 dismissal or summary judgment motions, while plaintiffs won 25 of those motions.

Claims Journal previously reported that business owners with policies without virus exclusions fare better early on than those with exclusions in their policies – although there are still more wins for insurers than for insurers. policyholders.

Lawsuits by Sylvester and Baldwin Academy allege that they have even greater protection than policies without virus exclusion: their policies had endorsements that said income lost due to illnesses is covered. In both cases, the judges ruled that because of these endorsements, policyholders ‘arguments may outlive insurers’ arguments that actual physical damage must exist, or at the very least, the coronavirus must be physically present on the home. property.

Sylvester’s Grille’s policy with State Automobile included an endorsement entitled “Business Income – Limited Extension for Food-BorneIllness”. Under that heading, the story says that coverage is available for “actual or suspected exposure of the described premises to contagious or infectious disease”. There is no mention of “foodborne” other than in the title.

State Automobile cited previous cases from Ohio that there is no coverage under a property insurance policy unless there is a physical modification to the property. The insurer cited an appeals court case that found no cover for black mold that had attached to the wall of a property.

Judge Heath, however, said none of the policies in the cases cited by the insurer contained an endorsement that specifically covered “communicable diseases”. The judge also rejected State Automobile’s argument that the use of the term “foodborne illness” in the title shows that the intention was to cover only risks arising from food.

“The wording of the policy does not contain any limitation that the risk must be food-related, but rather applies to ‘contagious or infectious disease,’ the judge’s order said.

In the case of San Diego, the policy of the Baldwin Academy contained an endorsement covering “communicable diseases such as, but not limited to, meningitis, measles or Legionnaires’ disease …”

The preschool filed a complaint after deciding to close the school last March when a parent informed the school that it had tested positive for COVID-19. The state and mayor of San Diego issued stay-at-home orders a few days later.

The insurer argued that no coverage was due because the wording of the policy requires that there be an actual outbreak on the property. Justice Huff, however, said the parent who contracted the virus can be interpreted by a jury as constituting an “epidemic”. In addition, state and local public health orders prohibited any gathering of more than 50 people.

“For now, without sufficient development of the case, the court refuses to decide whether the plaintiffs’ claim is outside the scope of the rider’s coverage in law,” Huff ordered to dismiss the petition’s request. insurer in rejection.

The lawsuits of Baldwin Academy and Sylvester’s Grille are not concluded. The Sylvester Grille case is now moving on to discovery and a potential trial. In the Baldwin Academy case, the judge suggested that the evidentiary record could be better developed in a motion for summary judgment rather than a motion to dismiss.

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