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Insurers’ COVID-19 Notepad: What You Need to Know Now - Week of July 18, 2022

Client Alert | 2 min read | 07.18.22

Courts Dismiss COVID-19 Business Interruption Claims

On July 6, 2022, the Sixth Circuit affirmed the dismissal of a power-conveyance and energy-management company’s COVID-19 business interruption claim. The court concluded that the policy’s contamination exclusion barred coverage, finding that the “actual or suspected presence of a virus like COVID-19 on [the insured’s] property is contamination” under the plain policy language and that the insured’s claims were “exclusively based on damage and loss related to COVID-19, not other physical damage.” Opinion at 6. The court further rejected the insured’s contention that the contamination exclusion did not apply because it covers only “traditional environmental contamination,” concluding that the “definition of contamination here clearly encompasses the presence of COVID-19 and there is no indication the exclusion is limited to traditional environmental contaminants.” Id. at 8. The case is Dana Inc. v. Zurich Am. Ins. Co.

On July 7, 2022, the U.S. District Court for the District of Massachusetts granted Hartford Fire Insurance Company’s motion for summary judgment against a background check company’s COVID-19 business interruption lawsuit. The court held the company did not allege physical loss or damage from the COVID-19 related shutdown orders based on the Massachusetts Supreme Judicial Court’s decision in Verveine Corp. v. Strathmore Ins. Co., 184 N.E.3d 1266 (Mass. 2022). Order at 6. As for the policyholder’s attempt to distinguish the case from prior ones, the court found the distinction “meaningless because in each of these cases the insured was not entitled to coverage because its property was not physically affected either by the virus itself or by government directives related to the virus.” Id. at 11. Lastly, the court held the company “cannot manufacture an ambiguity where there is none,” even if other states’ courts found in favor of policyholders. Id. at 12. The case is Creative Services, Inc. v. Hartford Fire Insurance Co.

New Business Interruption Suits Against Insurers:

A bar sued Certain Underwriters at Lloyd’s of London in Louisiana state court (Orleans Parish) for declaratory judgment, breach of contract, and breach of duty under Louisiana law. The “all risk” policy allegedly contains business income, extra expense, and civil authority coverage and does not contain a virus exclusion. Complaint, ¶¶ 12–16. However, it does contain a mold and pathogens exclusion. Id. ¶ 17. The case is C. Napco, Inc. v. Certain Underwriters at Lloyd’s of London Subscribing to Policy No. NF23588.

Insights

Client Alert | 3 min read | 03.28.24

UK Government Seeks to Loosen Third Party Litigation Funding Regulation

On 19 March 2024, the Government followed through on a promise from the Ministry of Justice to introduce draft legislation to reverse the effect of  R (on the application of PACCAR Inc & Ors) v Competition Appeal Tribunal & Ors [2023] UKSC 28.  The effect of this ruling was discussed in our prior alert and follow on commentary discussing its effect on group competition litigation and initial government reform proposals. Should the bill pass, agreements to provide third party funding to litigation or advocacy services in England will no longer be required to comply with the Damages-Based Agreements Regulations 2013 (“DBA Regulations”) to be enforceable....