On the restaurant owner’s side of the argument, the business had an “all-risk” policy — a broad insurance policy which includes any risk not specifically excluded by the policy. The restaurant’s policy did not specifically exclude a global viral pandemic, so the owner argues that the business is entitled to financial compensation. That Covid-19 insurance dispute case has not yet been resolved.
Those businesses with a specific virus exclusion in their policies could face a much tougher task in achieving business interruption coverage, but such an exclusion does not necessarily mean those cases are dead in the water.
New Jersey Court Rules “Physical Damages” could include Disease
In a more recent case filing, a New Jersey court ruled that “physical damages or losses” in a business insurance claim should be interpreted in favor of the claimant. The NJ court ruled that physical damages should include anything that renders a building uninhabitable, including “gases or bacteria.”
If that New Jersey precedent were to be applied to similar cases nationwide – though the jury is still out on that score — then business owners may be able to claim that their properties were rendered “uninhabitable” by the coronavirus. That would make them eligible for financial compensation.
Louisiana Insurance Commissioner
In Louisiana, the state’s Insurance Commissioner has said he believes it possible the courts would interpret even potential coronavirus infection as constituting physical damage.
The Tambellini Case
Meanwhile, some insurers who are being sued by their insured customers are attempting to slow down the court processes which are rapidly unfolding as businesses search for compensation needed to pay their expenses and remain viable.
An insurer facing a coronavirus-related business interruption case and various industry trade groups filed arguments last month urging a state high court not to fast-track the litigation process.
In Joseph Tambellini Inc. d/b/a Joseph Tambellini Restaurant v Erie Insurance Exchange — originally filed in state court in Pittsburgh — the policyholder petitioned to move the case directly to the Pennsylvania Supreme Court.
In an application for extraordinary relief filed April 29, the restaurant’s lawyers argued that the case presents issues important to “all citizens of the Commonwealth who are seeking recompense from their insurers for the losses, damage and expenses caused by the COVID-19 pandemic and the related governmental Orders.”
Dozens of small businesses across the country have filed various lawsuits in state and federal courts seeking business interruption coverage. They seek compensation from their insurance carriers for income lost from restrictions placed on their business operations imposed by government authorities who have closed businesses to limit spreading of the Wuhan Coronavirus.
Businesses have petitioned that they need immediate resolution of the insurance disputes as they try to restart their operations. Some Pennsylvania businesses feel that moving their cases directly to the state’s high court could eliminate years of delay that could result from the appeals process.
Erie Insurance responded that the case is a contractual dispute that should be heard through the established court process. The company also argued that the various lawsuits filed against insurers in the Copvid-19 business interruption disputes involve a wide variety of policy forms, endorsements and exclusions.
The company’s filing stated: “The idea that any court can. . . issue sprawling industry-wide rulings that will adjudicate potentially thousands of unknown disputes involving myriad contract forms, an exponential number of different types of businesses, and varying underlying facts is, respectfully, unthinkable.”
Legal experts believe that the Tambellini case will turn on the language of the Ultrapack Plus Commercial General Liability Policy it bought from Erie. That policy includes property coverage, and court papers say that a decision in the case will not have broad applicability in other Covid-19 coverage disputes where different insurers and policies are involved.
Meanwhile, American International Group Inc. and various insurer trade associations, including the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies filed amicus briefs opposing the Tambellini application to move the case to the state Supreme Court.
Despite the maneuvers by lawyers representing the Tambellini properties, it remains to be seen whether it is better for businesses to have their cases moved to a state supreme court, or whether they might stand a better chance at being compensated for Covid-19 business interruptions by keeping their individual cases in different state courts.
* First Covid Business Interruption Cases could affect Others