Insurers’ COVID-19 Notepad: What You Need to Know Now - Week of October 3, 2022

Courts Dismiss COVID-19 Business Interruption Claims

On September 19, 2022, the district court for the Central District of California granted Berkley Regional Insurance Company’s motion to dismiss two jewelers’ COVID-19 business interruption claims. The court concluded that the plaintiffs failed to plausibly allege any direct physical loss of or damage to property because a “temporary loss of intended use of property caused by government orders in response to COVID-19 does not constitute physical loss of or damage to the property.” Order at 7. The court further found that, even if coverage was otherwise available, “the Virus Exclusion, the Ordinance or Law Exclusion, and the Policies’ Acts or Decisions Exclusion would bar that coverage.” Id. at 10. The case is Jack Sarkissian, et al. v. Berkley Regional Ins. Co.

New Business Interruption Suits Against Insurers:

A university sued Employers Insurance Company of Wausau in Washington state court (King County) for breach of contract, declaratory judgment, breach of the duty of good faith and fair dealing, and alleged violations of Washington’s consumer protection act. Plaintiff’s five all-risk policies allegedly provide varying combinations of property, time element, extra expense, civil authority, ingress/egress, research and development, attraction, and communicable disease coverage. Complaint at ¶¶ 14-36. The complaint alleges that COVID-19 causes direct physical damage because it “physically transforms the content of the air in any location where it is present” and by “transforming physical objects, materials, or surfaces into ‘fomites.’” Id. at ¶¶ 58, 65.  The complaint also alleges Employers Insurance Company “conducted a bad faith paper investigation” of plaintiff’s claim and “never acknowledged that any portion of the Claims are covered.” Id. at ¶ 215. The case is Bd. Of Regents of the Univ. of Wash. V. Emps. Ins. Co. of Wasau.