Jan 29 2021

Insurance Law – 1/29/2021


A bill was introduced in the Washington legislature this week that would facilitate the ability of insureds to obtain business interruption coverage for pandemic-related losses. As proposed, SB 5351, would give insureds two years to sue for coverage and would require that “every property insurance policy containing a grant of 6 coverage for direct physical loss of or damage to property shall be 7 construed to include the deprivation of such property and the loss of 8 the ability to use such property.”

Mama Jo’s, the Miami restaurant whose “direct physical loss” defeat in the Eleventh Circuit last year spurred numerous Florida courts to grant insurer motions to dismiss in COVID-19 suits, has filed a petition for certiorari with the U.S. Supreme Court, asking the court to find:

  1. Whether construction dust and debris damage to covered property constitutes “direct physical loss” under an all-risk insurance policy.
  2. Whether it was appropriate for the lower court to impose a heightened testing standard and supplant itself for the jury in supplanting Plaintiff’s causation experts under Daubert and its progeny.

A federal judge in Ohio has issued a ruling in Neuro-Communication Services v, The Cincinnati Ins. Co., No. 20-1275 (N.D. Ohio Jan. 19, 2021) asking the Ohio Supreme Court to answer whether “the general presence in the community, or on surfaces at a premises, of the novel coronavirus known as SARS-CoV-2, constitute direct physical loss or damage to property; or does the presence on a premises of a person infected with COVID-19 constitute direct physical loss or damage to property at that premises?”

Amphenol Corp. has sued Factory Mutual seeking coverage for more than $100 million in pandemic-related losses.


FLORIDA     Consequential Damages

In a dispute between a landlord and its property insurer with respect to lost rental income due to Hurricane Frances, the Florida Supreme Court has ruled that Florida law does not allow insureds to recover extra-contractual, consequential damages in a first-party breach of insurance contract action brought by an insured against its insurer, not involving suit under section 624.155, Florida Statutes (2019). In a major victory for insurers, the Florida Supreme Court ruled in Citizens Property Ins. Corp. v. Manor House LLC, No. SC19-1394 (Fla. Jan. 21, 2021) that “extra-contractual, consequential damages are not available in a first-party breach of insurance contract action because the contractual amount due to the insured is the amount owed pursuant to the express terms and conditions of the insurance policy. Extra-contractual damages are available in a separate bad faith action pursuant to section 624.155 but are not recoverable in this action against Citizens because Citizens is statutorily immune from first-party bad faith claims.”

ILLINOIS     Construction Claims/”Occurrence”/”Property Damage”

The Appellate Court has ruled in Certain Underwriters at Lloyd's London v. Metropolitan Builders Inc., 2019 Il App. (1st) 190517 (Ill. App. Ct. Dec 29, 2020) that Lloyd's owed a duty to defend allegations that the insured general contractor caused a wall adjoining two structures to collapse. The First Department declared that even though there is no “occurrence” under a general liability policy for a subcontractor's defective workmanship that necessitates removing and repairing the work, allegations of damage that extend to other people or things that were not part of the contractors work product, would give rise to an "occurrence." Further, the court ruled that the trial court had erred in refusing to find "property damage" given allegations that the building occupant had suffered damage to its personal property.

MISSOURI     Excess/Challenge to Judgments

The Missouri Court of Appeals has ruled in Geiler v. Liberty Insurance Corp, WD 8363 (Mo. App. Jan 12, 2021) that an excess insurer had no right to collaterally attack the validity of the underlying wrongful death judgment since there was no basis for asserting that the court was without jurisdiction or that the judgment was void on its face. The Western District also ruled that Liberty could not assert an exclusion in its policy for the operations of the entity involved in this case as it had failed to respond to a statement of “Additional Uncontradicted Materials Facts" that contained this information. The Court of Appeal also ruled that summary judgment had properly been granted to the primary insurer (Starr) notwithstanding Liberty's contention that Starr had failed to discharge its duty to defend and had cooperated in setting up "an unsupported judgment implicating Liberty's excess policy."

NEW JERSEY     First Party/Superstorm Sandy

The New Jersey Supreme Court has issued a brief opinion adopting the view of lower courts that the NJTA may recover up to the full limit of its $400 million coverage for losses due to Superstorm Sandy, rejecting the insurers’ position that such losses should be reformed to apply a $100 million flood sublimit. In New Jersey Transit Corp. v. Certain Underwriters at Lloyd’s, London, No. A-72/73-19 (N.J. Jan. 27, 2021), the court ruled in a 3 page per curiam opinion that it was adopting the lower court’s view that “the water damage to [NJ Transit’s] properties that occurred during Superstorm Sandy is not subject to the $100 million flood sublimit.”


Inside the Insurance Industry

The 10th Allianz Risk Barometer 2021 reports that pandemic-related business interruption and cyber-claims top its respondents’ lists of major coverage concerns in 2021.

Upcoming CLE on COVID-19 Litigation

The American College of Coverage Counsel and the Seton Hall University School of Law will be presenting an updated webinar: Evolving Insurance Law Responses to the Global Pandemic to be held virtually on February 16 from 3 – 4:30 p.m. Eastern. To register, click on this link.

As the global pandemic approaches its first anniversary, it has ushered in a host of insurance law issues, some old and some new. The American College of Coverage Counsel, a leading organization of lawyers representing leading policyholder and insurer-side advocates, has joined forces with the Seton Hall University School of Law to provide an insightful overview of the evolving dynamics of these claims and resultant coverage litigation. In this webinar, insurance law experts will examine major pandemic-related issues and evaluate the strategies that policyholders and insurers alike are deploying in the nationwide contest over whether these losses will be covered.


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