Insurers’ COVID-19 Notepad: What You Need to Know Now - Week of November 15, 2021

Courts Dismiss COVID-19 Business Interruption Claims

On November 2, 2021, the district court for the Middle District of Tennessee granted Hartford Fire Insurance Company’s motion for judgment on the pleadings in a COVID-19-related business interruption lawsuit filed by a physiotherapy facility. The court held that the virus exclusion precluded coverage for the facility’s lost income because “[t]he plaintiff’s loss or damage was inescapably ‘caused directly or indirectly’ by the coronavirus.” Order at 8. The case is Agilitas USA Inc. v. Hartford Fire Insurance Company.

On November 9, 2021, the Court of Common Pleas of Franklin County, Ohio granted State Auto Insurance Companies’ motion for judgment on the pleadings in a COVID-19 business interruption claim filed by the operators of franchised Denny’s and Ruby Tuesday restaurants. The court rejected the insured’s contention that the term “loss” in “direct physical loss of or damage to property” includes “mere ‘loss of use’” and found that the provision “unambiguously refers to a loss that has a physical change or ruin to the covered property.” Order at 6. The case is Classic Dining Group, LLC, et al. v. State Auto Ins. Cos.

On November 9, 2021, the district court for the District of Connecticut granted Sentinel Insurance Company, Ltd.’s motion for judgment on the pleadings of a salon’s putative class  action complaint for pandemic-related business losses. Finding the virus exclusion clearly precluded coverage, the court held the business income losses were not covered under the policy. The case is One40 Beauty Lounge, LLC v. Sentinel Insurance Company, Ltd.

New Business Interruption Suits Against Insurers:

The owner of a hair salon sued Erie Insurance Property and Casualty Company in Pennsylvania State Court (Allegheny County) for declaratory judgment, breach of contract, and bad faith. The plaintiff’s “all-risk” policy allegedly provides business interruption and civil authority coverage. Complaint at ¶¶ 14-15. The complaint alleges the plaintiff suffered a covered physical loss because “[t]he COVID-19 Pandemic is physically impacting private commercial property.” Id. at ¶ 23. The case is Rollinson-Eldridge v. Erie Ins. Prop. & Cas. Co.