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Insurers' COVID-19 Notepad: What You Need to Know Now (Week of June 15)

Jun.15.2020

New Illinois Guidance on Riots, Civil Commotion and COVID-19:

An Illinois Insurance Department Bulletin issued June 8, 2020 stated that insurers should err on the side of the policyholder when paying claims as a result of riots, civil commotion, or vandalism from commercial policyholders who were unable to make full premium payments during the period following the Governor’s Executive Order 2020-10, dated March 20, 2020. Further, to the extent business interruption provisions are included and operative under a policy, insurers should base payouts on business activity levels that eliminate the impact of COVID-19.

Update on U.K. Financial Conduct Authority Suit:

As reported in the June 8th Notepad, on May 8, 2020, the UK’s Financial Conduct Authority (FCA) filed a High Court action against 8 insurers under what the FCA described as widely-used policy terms for a determination of whether they afford business interruption cover. The Court will be asked to rule on a series of common questions relating to the 17 policies selected. They include issues such as whether closure is required in whole or part, what is required to show a disease is in the “vicinity of the insured premises,” and whether micro-organism, pollution or contamination exclusions act to exclude the losses. The FCA claim and defenses are to be filed in June, and a final hearing is anticipated to be scheduled in the second half of July. Under the agreed framework, the FCA or any insurer may appeal, and the parties have agreed to explore an expedited appeal to the UK Supreme Court if necessary. The FCA’s expectation is that the rulings on particular common wordings will permit insurers and insureds to make an informed and business-minded decision about the scope of the cover. It will also facilitate the Financial Ombudsman Service’s determination of disputes that are referred to it.

UK Hiscox Action Group Initiates Arbitration:

The Hiscox Action Group reportedly has written to the insurer, formally triggering the arbitration clause in nearly 350 contracts, seeking a payment of close to £40m ($50.2m). Further claimants are expected to sign up to the proceedings, with the Hiscox Action Group saying it now has more than 600 members. Litigation funder Harbour reportedly is underwriting the Hiscox Action Group’s legal action.

UK Dentist Groups Exploring Action Against QBE:

The main association for UK dentists, the British Dental Association with 22,000 members, is reportedly seeking advice on the coverage for business interruption typically provided to dental practices, while a group of those practices has already formed an association to bring a group claim against QBE. The group action allegedly will provide dental practices insured by QBE a “viable collective route to litigation in circumstances where their COVID-19-related claims have been rejected by their insurer.”

UK Hospitality Industry “HIga” Legal Action:

Members of the hospitality industry have signed up with the UK Hospitality Insurance Group Action (HIga) legal team, which reportedly is in discussions with third-party funders and is reaching out to hotels, restaurants, bars, pubs, nightclubs and leisure businesses to participate in a proposed group action. HIga is targeting specific coverage clauses within policies underwritten by Aviva and QBE (UK). A separate action group has been formed by owners and operators of holiday cottages and homes in respect of policies issued by MGU, Eaton Gate, on behalf of Qatar Insurance Company.

UK Art Organizations Reportedly Plan Group Action:

Another UK group action reportedly is anticipated on behalf of more than 50 art galleries, museums and traders seeking business interruption cover. Reportedly most claimants were insured by Hiscox and Axa XL, and several policies that included cover for “notifiable human contagious or infectious disease.” On March 5, COVID-19 was declared a notifiable disease in the UK, meaning that registered medical practitioners have a statutory duty to notify health authorities of suspected cases of the disease.

New Business Interruption Suits Against Insurers:

The owner of a minor league professional baseball team in Pennsylvania sued CNA Financial Corporation, The Continental Insurance Company, and Continental Casualty Company in Pennsylvania state court (Lackawana County), asserting claims for declaratory relief, breach of contract, and bad faith. The “all risk” policy allegedly provides coverage for loss resulting from the “necessary interruption of business” caused by postponements and cancellations. Complaint at ¶¶38-40. The policy does not contain a virus exclusion. Id. at ¶41. The Complaint alleges that the team has a contract with the New York Yankees whereby players are contracted by the major league team and play for the minor league team; that prior to each season, players for the team join with players of other Yankee-affiliated teams in Tampa, Florida for Spring Training; and that the team’s Spring Training and portions of the 2020 season were cancelled and postponed indefinitely, resulting in a significant loss of revenue for the Team. Id. at ¶¶10-25. The Complaint further alleges that the insurers wrongfully denied coverage without conducting a reasonable investigation. Id. at ¶¶ 31, 59-81.

A restaurant in Philadelphia sued Seneca Insurance Company in Pennsylvania state court (Philadelphia County), asserting claims for declaratory relief, breach of contract, and unjust enrichment .The policy allegedly provides coverage for “Business Income Other Than Rental Value Benefits.” Complaint at ¶11. The Complaint alleges that the insurer refused to pay benefits under its policy, and that the defendant’s retention of paid premiums without providing such coverage would be unjust. Id. at ¶¶12, 31.

A digital marketing company in Ohio sued Erie Insurance Property & Casualty Company in federal court (W.D. Pa.), seeking a declaration that it is entitled to coverage for lost income and extra expense resulting from the pandemic, and from actions of state civil authorities restricting access to its place of business. The policy allegedly provides income protection, extra expense, and civil authority coverage. Complaint at ¶7. The policy does not contain a virus exclusion. Id. at ¶¶13-14. The Complaint alleges that the insurer denied a claim for coverage arising from allegedly direct physical loss of and damage to its property as a result of the pandemic and state closure orders. Id. at ¶¶64-66.

A bar and restaurant in Pittsburgh sued Motorists Commercial Mutual Insurance Company in Pennsylvania state court (Allegheny County), seeking a declaration of coverage for its losses allegedly sustained as a result of state closure orders. The “all risk” policy allegedly provides business income, extra expense, continuation, and civil authority coverage. Complaint at ¶¶6-8. The Complaint alleges that the insurer has wrongfully denied coverage. Id. at ¶32. The plaintiff also seeks an order enjoining the insurer from denying coverage to insureds for business income, extra expense, contamination, civil authority and other coverage for losses caused by the pandemic and state orders. Id. at ¶34. (Another bar and restaurant filed a carbon copy complaint in the same county against Motorists.)

A barber in Ohio sued Erie Insurance Property & Casualty Company in federal court (W.D. Pa.), seeking a declaration of coverage for past and future income losses resulting state closure orders. The policy allegedly provides income protection, extra expense, and civil authority coverage, and does not contain a virus exclusion. Complaint at ¶¶ 5-12. The Complaint alleges that “[i]t is probable” that the virus has been physically present at its premises and that it submitted a claim for coverage, but that the insurer “has denied or otherwise refused to honor” its claim. Id. at ¶¶63-65.

The owner of a group of car dealerships in Pennsylvania sued Erie Insurance Exchange in Pennsylvania state court (Allegheny County), seeking a declaration that it is entitled to coverage for business losses caused state closure orders. The “all risk” policy allegedly provides business income, extra expense, continuation, and civil authority coverage. Complaint at ¶¶6-8. The Complaint alleges that the insurer wrongfully denied the plaintiff’s claim for coverage. Id. at ¶33.

A fashion boutique in Philadelphia sued State Farm Fire & Casualty Company in federal court (E.D. Pa.), seeking a declaration that its insurance policy provides coverage for any current and future civil authority closures of non-essential businesses in Pennsylvania due to physical loss or damage from the coronavirus, and in the event the virus has caused loss or damage to its property. The “all risk” policy allegedly provides business income, extra expense, contamination, and civil authority coverage. Complaint at ¶¶10, 14-15. The Complaint alleges that the insurer rejected the plaintiff’s claim for coverage, in part based on the policy’s virus exclusion. Id. at ¶12.

The owner of salons in Washington, DC sued Erie Insurance Exchange in Pennsylvania state court (Philadelphia County), seeking a declaration that its insurance policy provides coverage for any current and future civil authority closures of non-essential businesses due to physical loss or damage from COVID-19, and that the policy provides business income coverage in the event the virus has caused a loss or damage to its properties. The “all risk” policy allegedly provides business income, extra expense, contamination, and civil authority coverage. Complaint at ¶¶17-19. The Complaint alleges that the insurer denied the plaintiff’s claim for coverage on the basis that the plaintiff did not suffer damage to its property. Id. at ¶15.

The owner of a restaurant in Nashville sued The Cincinnati Insurance Company, The Cincinnati Casualty Company, and The Cincinnati Indemnity Company in federal court (M.D. Tennessee), asserting claims for declaratory relief and breach of contract. The “all risk” policy allegedly provides business income, extra expense, and civil authority coverage, and does not contain a virus exclusion. Complaint at ¶¶23-34. The Complaint alleges that the insurer denied the plaintiff’s claims for coverage resulting from state-ordered interruption of its business, and that “[t]he speed and manner with which Defendants denied these claims indicate that Defendants already decided and put into place procedures for the blanket denial of claims, regardless of the particular facts of any given insured restaurant.” Id. at ¶¶1, 8, 40-42.

The owner of a salon in Virginia sued The Hartford and Twin City Fire Insurance Company in federal court (E.D. Va.), seeking a declaration that its insurance policy provides coverage for any current and future closures of businesses such as the plaintiff’s due to physical loss or damage from the virus, and the policy provides business income coverage in the event the virus has caused a loss or damage at the plaintiff’s property. The “all risk” policy allegedly provides business income, extra expense, contamination, and civil authority coverage. Complaint at ¶¶14-18. The Complaint alleges that the plaintiff contacted its insurance agent about making a claim under its policy, and was told that the insurers would reject the claim. Id. at ¶19.

A hospitality company sued The Hartford Fire Insurance Company and its subsidiaries in California state court (San Diego Cty.) alleging the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges that the policy contained an endorsement for limited coverage for damages arising from viruses, that Hartford’s denial based on the contention that there is no physical loss to the property is “unsupported by case law, both in California and other jurisdictions,” and that a contrary interpretation “renders the subject coverage illusory.” The complaint also names the broker agencies that procured the policy at issue for the company, alleging that the brokers “failed to apprise Plaintiffs of the availability of more comprehensive [business interruption] policies from The Hartford,” including failing to offer a policy that “provided full coverage for damage caused by viruses.”

The Party Shop sued State Farm Fire & Casualty Co. in Kentucky state court (McCracken County) for coverage for business losses as a result of COVID-19 shutdown orders. Complaint at ¶1. Plaintiff seeks coverage under the policy’s civil authority provision, which allegedly “provides coverage for loss of business income arising from an interruption of the Plaintiff’s business caused by an order from a civil authority.” Id. at ¶11. 

A restaurant group sued The Cincinnati Insurance Company in Arizona state court (Maricopa Cty.) alleging the insurer wrongfully denied its claims for business interruption losses due to Arizona’s COVID-10 closure orders. The complaint alleges that the policy at issue does not exclude losses caused by a virus, and that the restaurants “specifically purchased the [coverages] with the understanding that the Policy would provide all-risk coverage, and specifically cover business losses in the event of a shutdown from a virus pandemic.”

A hotel sued Truck Insurance Exchange in California superior court (Lake Cty.) alleging the insurer denied its claim for business interruption losses due to California’s COVID-19 closure orders on the same day the claim was submitted and was in bad faith. The complaint alleges Truck engaged in “deceptive and unfair business practices” in refusing to provide coverage, and that Truck now “refuse[s] to renew Plaintiff’s coverage, leaving the already desperate Plaintiff struggling to find new coverage as the expiration of the current plan approaches.”

A San Francisco hair salon sued Hiscox Insurance Company in California state court (Sonoma Cty.) alleging the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges the salon was “physically unable to utilize their business premises and thus loss (sic) the physical use thereof.”

An Alabama bar sued The Cincinnati Insurance Company in federal court (M.D. Ala.) alleging the insurer wrongfully denied its claim for business interruption losses due to Alabama’s COVID-19 closure orders. The complaint alleges the all-risk policy does not include a virus or communicable diseases exclusion, that the “presence of virus or disease can constitute physical damage to property,” and that “[t]he COVID-19 pandemic caused direct physical loss or damage to the Covered Property” because it “renders the Covered Property unsafe, uninhabitable, or otherwise unfit for its intended use, which constitutes direct physical loss.”

A California restaurant sued The Hartford and one of its subsidiaries in federal court (C.D. Cal.) alleging the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. While the complaint alleges the policy at issue contains “contamination coverage,” it also states that one of the grounds for defendant’s denial of its claim was the policy’s virus exclusion clause. However, the restaurant contends that “[t]he exclusion for viruses does not apply to this pandemic. The Policy does not identify any exclusions for a pandemic.”

A California restaurant sued Travelers in federal court (C.D. Cal.) alleging the insurer wrongfully denied its claims for business interruption losses due to California’s COVID-19 closure orders. Although the all-risk policy contains a virus exclusion, the restaurant contends that “[t]he exclusion for viruses does not apply to this pandemic,” and that “Defendants have accepted the policy premiums with no intention of providing any coverage for business losses or the Civil Authority extension due to a loss and shutdown and property damage.”

Sika Investments sued Mt. Hawley Insurance Company in Louisiana state court (Jefferson Parish) in connection with business losses sustained as a result of COVID-19. Plaintiff alleges its buildings have been damaged and access, ingress, and/or egress to them was prohibited and/or impaired by civil authority in response to COVID-19. Complaint at ¶11. Plaintiff seeks declaratory relief and damages in connection with claims for breach of contract and bad faith. 

A California sports bar sued The Hartford and its subsidiary in federal court (C.D. Cal.) alleging the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges that the all-risk policy “provide[s] coverage for all non-excluded business losses, and thus provide[s] coverage here,” and that the policy’s virus exclusion does not apply because “[t]he policy does not identify any exclusions for a pandemic.” The complaint further asserts that “[a]ny effort by Defendants to deny the reality that the virus causes physical loss and damage would constitute a false and potentially fraudulent misrepresentation that could endanger Plaintiff and the public.” A nearly identical complaint was also filed on behalf of the same sports bar, but identifies a different owner and an additional bar location.

Several Play It Again Sports franchises sued Nova Casualty Co. in federal court (N.D. Ill.) alleging the insurer wrongfully denied its claim for business interruption caused by Illinois COVID-19 government closure orders. The retailers allege the losses incurred due to the closure orders are covered under the policy’s business income, extra expense, and civil authority coverage parts, and that the policy’s virus exclusion “does not exclude coverage for global pandemics, or any of the circumstances giving rise to Plaintiffs’ claims.” Complaint at ¶45.

Schroeder Publishing Co sued Great Northern Insurance Company in Kentucky state court (McCracken County) seeking coverage for business losses as a result of COVID-19 related closure orders issued by Kentucky and Tennessee. Complaint at ¶1. Plaintiff seeks coverage under the policy’s civil authority provision, which allegedly “provides coverage for loss of business income arising from an interruption of the Plaintiff’s business caused by an order from a civil authority.” Id. at ¶9. 

Kentucky restaurant Varanese Fusion sued Erie Insurance in Kentucky state court (Jefferson County) in connection with business losses sustained due to COVID-19 related shut down orders. Plaintiff alleges it was required to cease all on-site operations in response to a statewide order issued by the Governor of Kentucky. Complaint at ¶8. The complaint seeks a declaration that it has sustained a covered loss under the policy due to the actions of a civil authority. Id. at ¶17.

The owners of several Michigan restaurants filed a declaratory action against Lloyd’s in federal court (E.D. Mich.) seeking coverage for business interruption losses due to COVID-19 closure orders. Plaintiffs allege that, as a result of the actions of civil authorities, they were required to shut the doors to their restaurants. Complaint at ¶34. The complaint asserts “Plaintiffs have incurred, and continues to incur…a substantial loss of business income and additional expenses covered under the [all-risk] policy.” Id. at ¶40.

Salon XL sued West Bend Mutual Insurance Company in Michigan state court (Washtenaw County) asserting claims for declaratory relief, breach of contract, and violations of Michigan’s Uniform Trade Practices Act. The complaint alleges that it incurred covered business interruption losses as a result of the actions of a civil authority, and the policy’s virus exclusion is not applicable. Complaintat ¶20. Plaintiff alleges West Bend “arbitrarily and without justification refused to reimburse Salon XL for any losses incurred in connection with…the Closure Orders and the necessary interruption for its business stemming from the COVID-19 pandemic.” Id. at ¶31.

Hospitality company Hakkasan USA sued Endurance American Specialty Insurance Company in Nevada state court (Clark County) seeking coverage for losses caused by Nevada COVID-19 government closure orders. Plaintiff alleges that it sustained business income loss and property damage due to the suspension of its business in response to closure orders and required health and safety measures. Complaint at ¶¶50-52. Plaintiff alleges it was fraudulently induced to accept an amendatory endorsement retroactively limiting coverage for its outstanding time-element claim. Id. at ¶¶73-76. The complaint asserts claims for breach of contract, bad faith, civil conspiracy, fraud, and negligence.

New Jersey restaurant The Fox & Falcon sued Hartford Underwriters Insurance Company is New Jersey state court (Essex County) for business interruption losses related to COVID-19 civil authority orders. Plaintiff alleges that the “all-risk” policy provides” “Business Income, Extra Expense, Civil Authority, Extended Business Income, and Limited Fungi, Bacteria, and Virus coverage.” Complaint at ¶24. The complaint asserts the “Fungi, Bacteria, or Virus exclusion does not apply…because the COVID-19 virus is not the sole source of direct physical loss or physical damage.” Id. at ¶¶66-67. Rather, Plaintiff contends it has suffered loss due to the suspension of operations because of the government closure orders. Id. at¶67.

A New Mexico retailer sued Cincinnati Insurance Company in New Mexico state court (Santa Fe County) seeking coverage for business loss due to shut down orders issued in response to COVID-19. The complaint alleges Plaintiffs’ “retail businesses were ordered and directed to close…as ‘non-essential’ retail spaces” in response to the government closure orders. Complaint at ¶20. Plaintiffs allege the policy provides coverage for business interruption, extra expense, the actions of civil authorities, and the policy’s pollution exclusion is not applicable to loss caused by the coronavirus. The complaint seeks declaratory relief and damages in connection with claims for breach of contract and bad faith.

An art gallery sued Sentinel Insurance Company in federal court (S.D.N.Y.) seeking coverage in connection with business losses sustained due to COVID-19. Plaintiff alleges it was required to “suspend business operations at the gallery as a result of…civil authority orders issued by the Government of the State of New York in response to the outbreak of COVID-19.” Complaint at ¶9. The complaint asserts that as a result of the suspension orders, Plaintiff has suffered losses covered under the all-risk policy’s Business Income, Extra Expense, and Civil Authority provisions. Plaintiff alleges the policy’s “Pollution exclusion is not applicable because COVID-19 is not a “Pollutant or Contaminant,” and Plaintiff’s losses were…the proximate cause of…precautionary measures taken by the New York civil authorities.” Id. at ¶33.

The Quapaw Nation of Oklahoma sued Affiliated FM Insurance Company in Oklahoma state court (Ottawa County) seeking damages in connection with claims for breach of contract and bad faith under the issued all-risk policy. Plaintiff alleges that, as a result of the COVID-19 pandemic, it sustained business interruption, extra expense, interruption by civil authority, limitations on ingress and egress, and expenses to reduce loss covered under the all-risk policy at issue. Complaint at ¶9. Plaintiff alleges the insurer wrongfully denied its claim based on the assertion that “there has not been any reported case of COVID-19” at any of the insured locations. Id. at ¶19.

The owner and operator of a dry-cleaning business in Texas sued Nationwide Mutual Insurance in federal court (N.D. Ohio), alleging the insurer wrongfully denied its claim for business income and Civil Authority coverage due to Texas’ COVID-19 closure orders. The “all risk” policy at issue allegedly provides coverage for loss of business income and extra expenses resulting from civil authority orders. Complaint at ¶ 16. The insurer allegedly denied coverage because of the policy’s Virus Exclusion Clause and because the business did not suffer damage to its property. Id. at ¶ 14. The Complaint alleges that the virus “is physically impacting Plaintiffs” and there is “an ever-present risk that the Mesquite Insured Property was contaminated and would continue to be contaminated” due to the constant cycling of staff, customers, community members and others in and out of the business. Id. at ¶¶ 39, 42. 

An Ohio nail salon sued Hiscox Insurance Company, Inc. in Ohio state court (Cuyahoga County), alleging the insurer wrongfully denied its claim for loss of business personal property, business income, and business interruption and extra expense due to Ohio’s COVID-19 closure orders. The Complaint alleges that the policy at issue “provides for many specific circumstances where Defendant will not provide coverage—like volcanoes, earthquakes, or a computer virus—but does not explicitly exclude circumstances due to other ‘acts of God,’ like viruses spreading in a community.” Complaint at ¶ 11. The Complaint further alleges that the “coronavirus can cause direct physical harm and property damage” and it “is physically impacting property in Ohio.” Id. at ¶ 19.

The operator of cocktail mix processing plants in Pompano Beach, Florida sued Mitsui Sumitomo Insurance Company in Florida state court (Broward County), seeking damages arising from the alleged refusal to provide insurance coverage for business losses arising from COVID-19 closure orders. The “all risk” policy at issue allegedly provides coverage for business income losses and extra expenses that result from an involuntary interruption of business operations. Complaint at ¶ 17. The Complaint alleges that the COVID-19 pandemic is tantamount to a natural disaster and therefore involves substantial damage to property, like other disasters such as hurricanes and earthquakes. Id. at ¶ 34. 

The owner and operator of a restaurant in Maitland, Florida sued Blackboard Insurance Company in federal court (M.D. Fla.), alleging the insurer wrongfully denied its claim for business interruption losses due to Florida’s COVID-19 closure orders. The “all risk” policy at issue allegedly provides coverage for business income and extra expenses resulting from civil authority actions. Complaint at ¶ 2. The Complaint alleges that the suspension of business operations “constitutes an impairment of function that resulted in a covered cause of loss or damage.” Id. at ¶ 93.

The operator of a restaurant in Florida sued Covington Specialty Insurance Company in Florida State court (Miami-Dade County), alleging the insurer wrongfully denied its claim for business interruption losses due to Florida’s COVID-19 closure orders. The “all risk” policy at issue allegedly provides coverage for business losses and extra expenses resulting from an involuntary interruption of business operations. Complaint at ¶ 17. The Complaint alleges the COVID-19 pandemic is a “natural disaster” and “[l]ike other specific disasters, such as hurricanes or earthquakes, it involves substantial damage to property, hardship, suffering, and loss of life.” Id. at ¶ 38.

An Alabama restaurant sued The Cincinnati Insurance Company in federal court (M.D. Ala.) seeking a declaration that the insurer is obligated to provide coverage for its claim for business interruption losses due to Alabama’s COVID-19 closure orders. The restaurant alleges that Cincinnati issued a reservation of rights letter in response to its claim submission, that the all-risk policy does not include an exclusion for losses caused by the spread of viruses or communicable diseases, and that any attempt by the insurer to “deny the reality that the virus causes physical loss and damage would constitute a false and potentially fraudulent misrepresentation that could endanger the Plaintiff and the public.”

An Alabama restaurant sued The Cincinnati Insurance Company in federal court (M.D. Ala.) seeking a declaration that the insurer is obligated to provide coverage for its claim for business interruption losses due to Alabama’s COVID-19 closure orders. The complaint alleges the all-risk policy provides coverage for Business Income, Civil Authority, and Extra Expense losses, does not contain a virus or communicable disease exclusion, and as such, “[l]osses due to the COVID-19 virus pandemic are a Covered Cause of Loss that is not excluded under the Policy.” The complaint asserts that the 2006 ISO virus exclusion constitutes proof that the “insurance industry has recognized” that “[t]he presence of virus or disease can constitute physical damage to property.”

A nail salon sued Lloyd’s of London in California state court (Los Angeles Cty.) alleging the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges that Lloyd’s denied coverage under the all-risk policy by stating solely that “limited restriction of access to your property does not qualify as an eviction,” and that per California law, Lloyd’s is now barred from asserting any other factual or legal basis for its denial.

New Business Interruption Class Action Filings:

A restaurant in Pennsylvania sued Grange Insurance Company in federal court (W.D. Pa.), asserting claims for declaratory relief and breach of contract. The “all risk” policy at issue allegedly provides business income, extra expense, and civil authority coverage. Complaint at ¶¶15-22. The Complaint alleges that the insurer denied the plaintiff’s claim for coverage based in part on the policy’s virus exclusion, which excludes losses caused by “any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.” Id. at ¶¶39-40. The Complaint further alleges that the Defendant “has denied, or will deny, other Class members’ claims for coverage.” Id. at ¶58. The class is defined as “[a]ll policyholders in the United States who purchase commercial property coverage … from Defendant and who have been denied coverage under their policy for lost business income after being ordered by a governmental entity, in response to the COVID-19 pandemic, to shut down or otherwise curtail or limit in any way their business operations.” Id. at ¶60.

The owners of New Jersey restaurants filed a class action complaint against Selective Insurance Company in federal court (D. N.J.) seeking coverage for business losses sustained due to COVID-19 and related civil authority orders. Plaintiffs allege, as a result of the stay-at-home orders issued by the majority of states, they have been unable to operate in the ordinary course of business and suffered business losses as a result. Complaint at ¶34. Although the all-risk policy contains a virus exclusion, the class complaint asserts the policies issued to plaintiffs and class members provide Business Income, Extra Expense, and Civil Authority coverage for losses sustained by class members as a result of measures taken by state officials in response to COVID-19. Id. at ¶46. The complaint seeks damages on behalf of a nationwide class of Selective policyholders and a sub-class of policyholders who insured property in New Jersey. Id.at ¶59.

Golden Corral filed a class action complaint against Certain Underwriters at Lloyd’s, London in federal court (C.D. Ill.) seeking coverage for COVID-19 losses under the policy’s Pandemic Endorsement. The complaint alleges the Pandemic Endorsement provides coverage for loss resulting from a “Pandemic Event including (but not limited to) circumstances where the CDC or WHO declared an epidemic, with an epidemic (or here, pandemic) involving an occurrence of a Covered Disease.” Complaint at ¶45. The complaint asserts the insurers’ reservation of rights as the insurer “process[ed] Plaintiff’s claim as if it was covered under the Pandemic Endorsement” is improper. Id. at ¶51. The class consists of U.S. insureds “who made insurance claims with Defendants for loss of business income and/or expenses under the Underwriters at Lloyd’s Pandemic Event Endorsement.” Id. at ¶54.

An Oklahoma venue, The Vanguard, filed a class action complaint against Covington Specialty Insurance Company in federal court (N.D. Okla.) asserting claims for declaratory relief and breach of contract. The policy at issue allegedly provides business income, extra expense, sue and labor, and civil authority coverage. The complaint alleges that the plaintiff filed a claim for loss under its policy due to the presence of COVID-19 and the closure orders, but the insurer denied its claim. Complaint at ¶38. The class is divided into breach of contract and declaratory relief subclasses.

The owner of fitness centers filed a class action complaint against Mt. Hawley Insurance Company in federal court (N.D.Ill.) seeking coverage for business interruption losses sustained as a result of the closure orders aimed at curbing the spread of COVID-19. The policy at issue allegedly provides business income, extra expense, sue and labor, and civil authority coverage and does not contain a virus exclusion. The class is defined as “insured under the SAPP Master Package Policy Form coverage…[who] suffered a suspension or closure of business related to Covid-19, [and] were denied business interruption, civil authority, extra expense and/or sue and labor insurance coverage.” Complaint at ¶62.

Restaurant Nanina’s In The Park filed a class action complaint in federal court (D. N.J.) against Liberty Mutual Insurance and Ohio Security Insurance Company seeking coverage for business losses sustained due to COVID-19 and related civil authority orders. Plaintiff alleges that, as a result of the stay-at-home orders issued by the majority of states, they have been unable to operate in the ordinary course of business and suffered business losses as a result. Complaint at ¶32. Although the all-risk policy contains a virus exclusion, the class complaint asserts the policies issued to plaintiffs and class members provide Business Income, Extra Expense, and Civil Authority coverage for losses sustained by class members as a result of measures taken by state officials in response to COVID-19. Id. at ¶44.

The owner of a fitness club in California sued Philadelphia Indemnity Insurance Company on behalf of itself and all others similarly situated in federal court (E.D. Pa.), asserting claims for declaratory relief and breach of contract. The “all risk” policy at issue allegedly provides business income, extra expense, civil authority, and contingent business property coverage (Complaint at ¶¶ 17-26), and a virus exclusion for “loss or damage caused b or resulting from any virus, bacterium or other microorganism.” Id. at ¶52. The class is defined as all policyholders in the U.S. who purchased commercial property coverage from the insurer, who have been denied coverage for lost income after being ordered by a governmental entity to shut down or limit business operations in response to the pandemic. Id. at ¶65. The Complaint alleges that the insurer has denied the plaintiff’s claim for coverage under the policy, and has similarly refused or will refuse to provide coverage to the class members. Id. at ¶¶4-5.

A restaurant in Pittsburgh sued Nautilus Insurance Company in Pennsylvania state court (Allegheny County) on behalf of itself and all others similarly situated, asserting claims for declaratory and injunctive relief. The “all risk” policy at issue allegedly provided business income, extra expense, and civil authority coverage. Complaint at ¶¶6-8. The plaintiff seeks a declaration of coverage for business losses allegedly suffered as a result of the pandemic and subsequent state closure orders on behalf of the class, and an injunction prohibiting the insurer from denying coverage to its insureds for such losses. Id. at ¶¶30-35. The class is defined as Pennsylvania insureds of the defendant who have suffered losses related to the pandemic and referenced state orders, and for whom the defendant has disclaimed and/or refused to acknowledge coverage. Id. at ¶38.

A bar and restaurant in Pennsylvania sued Motorists Commercial Mutual Insurance Company in Pennsylvania state court (Allegheny County) on behalf of itself and all others similarly situated, asserting claims for declaratory and injunctive relief. The “all risk” policy at issue allegedly provided business income, extra expense, and civil authority coverage. Complaint at ¶¶6-9. The plaintiff seeks a declaration of coverage for business losses allegedly suffered as a result of the pandemic and subsequent state closure orders on behalf of the class, and an injunction prohibiting the insurer from denying coverage to its insureds for such losses. Id. at ¶¶30-34. The class is defined as Pennsylvania insureds of the defendant who have suffered losses related to the pandemic and referenced state orders, and for whom the defendant has disclaimed and/or refused to acknowledge coverage. Id. at ¶38.

A restaurant in Pennsylvania sued Erie Insurance Group in federal court (E.D. Pa.) on behalf of itself and all others similarly situated, seeking a declaration that the defendant’s policies provide coverage to the plaintiff and the class for any current and future loss of income as a result of civil authority orders affecting the operation of their business due to physical loss or damage caused by the pandemic. Complaint at ¶59. The “all risk” policy allegedly provides business income, extra expense, and civil authority coverage, and contains a virus exclusion. Id. at ¶¶14-20. The class is defined as “[a]ll restaurants that have suffered business interruption and lost income as a result of Civil Authority Orders issued in response to the COVID-19 pandemic.” Id. at ¶44.

The owner of salons in Philadelphia sued Erie Insurance Exchange on behalf of itself and all others similarly situated in federal court (E.D. Pa.), seeking a declaration that the insurer’s policies provide coverage to plaintiff and the class for loss of business income as a result of the pandemic and subsequent civil authority orders. The “all risk” policy allegedly provides income protection, business personal property, civil authority, and extended business income coverage, and contains a virus exclusion. Complaint at ¶¶11, 16-18. The Complaint alleges that the insurer denied coverage (id. at ¶¶12, 20), and that the insurer will assert its policies do not provide coverage for similarly situated class members. Id. at ¶13. The class is defined as “[a]ll restaurants that have suffered business interruption and lost income as a result of Civil Authority Orders issued in response to the COVID-19 pandemic. Id. at ¶48.

The owner of an oral and surgical dental business in Washington sued Valley Forge Insurance Company and Transportation Insurance Company in federal court (W.D. Washington) on behalf of itself and all others similarly situated, in two separate complaints. Thepolicies at issue allegedly provide business income, extra expense, extended business income, and civil authority coverage. Valley Forge Complaint at ¶13; Transportation Complaint at ¶13. Both classes are divided into national and Washington subclasses, and breach of contract and declaratory relief subclasses. Valley Forge Complaint at ¶27; Transportation Complaint at ¶28. Both complaints allege that the insurer denied coverage, and has denied coverage for other similarly situated policyholders. Valley Forge Complaint at ¶¶47-48; Transportation Complaint at ¶¶47-48.

A hotel filed a class action lawsuit against Farmers Insurance Exchange and its subsidiaries and affiliates in California state court (Stanislaus Cty.) alleging the insurer wrongfully denied its claims for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges that Farmers intentionally did not define the term “direct physical loss” “so that it has the meaning Defendants now assert against its insureds,” and did not conduct an “investigation into the covered premises to determine the precise physical loss or damage that resulted from the governmental orders.”

The owner of a Hawaii gift shop chain filed a class action lawsuit against Allianz and its subsidiaries in federal court (N.D. Cal.) alleging the insurer wrongfully denied its claim for business interruption losses due to Hawaii’s COVID-19 closure orders. The complaint alleges that the policy does not contain a virus exclusion, that, as a result of the orders, “physical components of [Plaintiff’s] stores became unusable, damaged, and/or lost the ability to generate income,” and that the orders were “issued as a result of physical loss, physical damage, and dangerous physical conditions occurring in the properties outside of [Plaintiff’s] stores.”

The owner an Alabama banquet facility filed a class action lawsuit against The Cincinnati Insurance Company in federal court (S.D. Ala.) alleging the insurer wrongfully denied its claim for business interruption coverage due to Alabama’s COVID-19 closure orders. The owner alleges that its claim was denied in part because of the policy’s pollution exclusion, but that the “exclusion is inapplicable because an illness-causing virus is not an ‘irritant’ or contaminant,’” and that “[a]t best, the exclusion is ambiguous in this regard, which means it must be construed” in favor of the policyholder.

A Hawaiian food restaurant filed a class action lawsuit against Farmers Insurance Exchange in California state court (Contra Costa Cty.) alleging that the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges Farmers provided a “cursory denial letter” stating there was no direct physical loss or damage to property, and that the policy included a virus exclusion “for loss or damage caused by or resulting from any virus that is capable of inducing physical distress.” The restaurant contends that the denial letter “appears to be a form letter sent in response to business interruption claims” and is “contrary to the terms and conditions of the policy.”

An Ohio audiology practice filed a class action complaint against The Cincinnati Insurance Company, The Cincinnati Casualty Insurance Company, and The Cincinnati Indemnity Company in federal court (N.D. Ohio) for business income losses related to COVID-19 civil authority orders. The “all risk” policy allegedly covers business income, extended business income, extra expense, and action of civil authority. Complaint at ¶ 4. The Complaint alleges that losses due to COVID-19 and Ohio Civil Authority Orders are a covered cause of loss because “they constitute direct ‘loss’ and are not otherwise excluded.” Id. at ¶ 14. The proposed class is defined as “[a]ll persons and entities that: (a) had Business Income coverage under a property insurance policy without a virus exclusion issued by Defendants; (b) suffered a suspension of their operations related to COVID-19 or the Ohio Civil Authority Orders (or other civil authority order related to COVID-19) impacting the premises covered by their property insurance policy; (c) made a claim under their property insurance policy issued by Defendants; and (d) were denied Business Income coverage by Defendants.” Id. at ¶ 43.

The owner of home and garden goods retail stores filed a class action lawsuit against Ohio Security Insurance Company in federal court (N.D. Cal.) alleging the insurer wrongfully denied its claim for business interruption losses due to California’s COVID-19 closure orders. The complaint alleges that “insurance companies operating in California are categorically denying claims from retailers” and that such denials “rest on crabbed readings of coverage language and overbroad readings of exclusions” raising “the specter of bad-faith denials.”

An Alabama restaurant chain filed a class action lawsuit against The Cincinnati Insurance Company in federal court (N.D. Ala.) alleging the insurer wrongfully denied its claim for business interruption losses due to Alabama’s COVID-19 closure orders. The complaint alleges that “because the Policy is an all-risk policy and does not specifically exclude the losses that Plaintiffs have suffered, those losses are covered.” The restaurant chain asserts that “[t]here has been a direct physical loss of and/or damage to the covered premises under the Policy” by, among other things, “denying access to the property, preventing customers from physically occupying the property, causing the property to be physically uninhabitable by customers, causing its function to be nearly eliminated or destroyed, and/or causing a suspension of business operations on the premises.”

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Laura Foggan
Partner – Washington, D.C.
Phone: +1 202.624.2774
Email: lfoggan@crowell.com
Mark Meyer
Partner – London
Phone: +44.20.7413.1326
Email: mmeyer@crowell.com
Adam J. Singer
Associate – Washington, D.C.
Phone: +1 202.688.3508
Email: asinger@crowell.com
Austin J. Sutta
Associate – San Francisco
Phone: +1 415.365.7404
Email: asutta@crowell.com